Looking for a test of the Supreme Court's recent ruling on pay-for-delay patent settlements? The Federal Trade Commission (FTC) is ready to deliver. The antitrust agency has submitted an amicus brief in an antitrust case pitting drug retailers against Wyeth and Teva Pharmaceutical Industries ($TEVA) in a challenge to the companies' Effexor XR settlement.
Thing is, this court has stiff-armed the FTC before. Last year, Judge Joel Pisano refused to accept a similar brief from the agency. What's different now? The Supreme Court's ruling in FTC v. Actavis, which allowed that some "reverse payment" patent settlements could be illegal.
In this case, the FTC would be testing the idea that cash doesn't have to change hands for a patent settlement to be anticompetitive. The plaintiffs in Effexor case contend that Wyeth induced Teva to delay its copycat launch by promising not to sell its own authorized generic version for 6 months after Teva's appeared. That's the 180-day exclusivity period granted first-to-file generics makers under the Hatch-Waxman Act, a lucrative prize.
Wyeth, now owned by Pfizer ($PFE), and Teva maintain that their agreement doesn't amount to a reverse payment because it didn't involve a cash payment.
But the agency claims that a promise not to compete is valuable enough to qualify as an antitrust violation. When a branded drugmaker doesn't launch an authorized copy during that 180-day period, the generics maker sees higher sales, and customers pay higher prices, the FTC says, citing its own research on the subject.
"[T]he allegations here raise the same type of antitrust concern that the Supreme Court identified in Actavis," the FTC said in a statement, quoting its amicus brief. "[A]ccepting the defendants' claim of immunity whenever patentees use vehicles other than cash to share the profits ... would allow drug companies to easily circumvent the ruling in Actavis, at great cost to consumers."
We'll have to wait and see what Judge Pisano decides. But even if he accepts the brief, that doesn't guarantee that the FTC's position will prevail. In any event, we'll get some idea of the post-Actavis landscape.
- read the FTC release