Just when it seemed like the Federal Trade Commission campaign against "pay-for-delay" pharma deals had gone quiet, the agency has sued Endo, Allergan and Impax Laboratories for striking a deal to prevent authorized generics of two drugs from hitting the market.
The complaint, announced on Thursday, accuses Endo ($ENDP) and partner Teikoku Seiyaku in 2012 of working a deal in which they compensated Watson Laboratories "hundreds of millions of dollars" to hold off a generic version of Endo's Lidoderm patch. Watson is now part of Allergan ($AGN). The FTC said sales of the patch reached $1 billion that year.
It also accuses Endo of paying Impax ($IPXL) $112 million in 2010 to hold off releasing an authorized generic version of Endo's painkiller Opana ER, then reaped $250 million in sales that year. The delay, the FTC alleges, eased Endo's own financial pain by giving it time to transition patients to a new formulation of Opana ER, "thereby maintaining its monopoly power."
FTC Chairwoman Edith Ramirez
"Settlements between drug firms that include 'no-AG commitments' harm consumers twice--first by delaying the entry of generic drugs and then by preventing additional generic competition in the market following generic entry," said FTC Chairwoman Edith Ramirez. "This lawsuit reflects the FTC's commitment to stopping pay-for-delay agreements that inflate the prices of prescription drugs and harm competition, regardless of the form they take."
The FTC is seeking a federal court decision that the companies violated antitrust laws, that they agree not to strike similar deals in the future, and then that they cough up "their ill-gotten gains."
FTC Commissioner Maureen Ohlhausen
Not all members of the FTC thought the lawsuit was a good idea, however. It was a 3-1 decision with Commissioner Maureen Ohlhausen voting against it. In her dissent, she said while she had reason to believe that the deal violated the FTC act she thought an "administrative solution" would be better than having the companies pay back the proceeds.
Drugmakers have always argued the deals are legal and intended only to get rid of the uncertainty of litigation that usually plays out when generics are approved. But the FTC recently reported that its efforts to fight the deals over the last decade appeared to be changing pharma's embrace of the tactic. In an annual report, the FTC cited 21 suspect settlements between branded drugmakers and generics companies for fiscal 2014. That's down 27.5% from 29 in 2013, and about half of 2012's record.
A big chill fell over the practice after a 2013 U.S. Supreme Court decision that said while the arrangements are not illegal on their face, certain features would make them so, and the FTC could crack down on patent settlements that went too far. The FTC has had mixed results since that decision. Last year, it won its largest pay-for-delay settlement, a $1.2 billion payout from generics giant Teva Pharmaceutical Industries ($TEVA) over complex agreements Teva hammered out to hold off knockoffs of sleep apnea drug Provigil. But it also saw a federal judge toss a case involving AbbVie ($ABBV) striking a deal with Teva to hold off a copy of testosterone enhancer AndroGel.