In the post-FTC v. Actavis world, cash doesn't have to change hands for a pay-for-delay deal to fall afoul of antitrust law. That's becoming clear as court rulings pile up. And a new U.S. appeals court decision specifically addresses a branded drugmaker's agreement not to launch an authorized generic of its branded drug.
The Third Circuit Court of Appeals ruled that a lower court shouldn't have tossed out a lawsuit against GlaxoSmithKline ($GSK) and Teva Pharmaceuticals ($TEVA) over a Lamictal patent settlement. That agreement didn't involve a cash payment, but Glaxo pledged not to launch an authorized generic version of the seizure drug and allowed Teva to roll out a chewable version early.
As the New Jersey Law Journal reports, that "no-AG" promise could be subject to antitrust scrutiny, the appeals panel decided. Teva had 180-day exclusivity for a Lamictal generic, and the absence of an authorized copy would mean less price competition--and more revenue.
Two Lamictal purchasers sued GSK and Teva over their settlement, claiming that the deal qualified as a reverse payment under the U.S. Supreme Court's Actavis ruling. King Drug and Louisiana Wholesale Drug claimed that the no-AG agreement induced Teva to give up the patent fight, and that the deal eliminated the risk of competition longer than GSK's patent would have allowed.
The two drugmakers claimed that only cash payments qualify for antitrust scrutiny, and the lower court agreed--twice, the second time after the 2013 Actavis ruling.
When the Supreme Court issued that ruling--which said that patent settlements could be anticompetitive but had to be considered on a case-by-case basis--it put a host of previous rulings in doubt, and drugmakers have been watching closely to see how the courts interpret it. If noncash settlements can be equally problematic, then that gives pharma fewer options when it comes to settling patent disputes. The U.S. Federal Trade Commission, which has led the way in the fight against pay-for-delay settlements, says drugmakers should have their options limited, because the agreements are costing taxpayers millions of dollars in spending on branded drugs that otherwise might have gone generic.
The Third Circuit explained that in its view, Actavis wasn't about cash but about leverage, however it's applied. "The thrust of the court's reasoning is not that it is problematic that money is used to effect an end to the patent challenge, but rather that the patentee leverages some part of its patent power to cause anti-competitive harm," the appeals court said (as quoted by the legal journal).
GSK "continues to believe that plaintiffs have failed to plead any facts consistent with an agreement to harm competition," and that settling fosters competition by letting parties resolve expensive and disruptive litigation, the company said in a statement.
Last month, the FTC won its bid to force Teva to hand over $1.2 billion in past profits, in a case over a pay-for-delay agreement on its branded wakefulness drug Provigil. That case didn't involve a cash payment either; Teva's branded drug unit Cephalon promised generics makers payment for active ingredients and intellectual property to keep generics at bay.
- read the NJ Law Journal piece (reg. req.)
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