FTC Sees No-AG Patent Settlements as Method to Delay Generics

On Friday, the Federal Trade Commission filed an amicus brief in the Federal Court in New Jersey which oversees numerous lawsuits against drug companies. In the instant case, there is a private anti-trust challenge to an agreement between Pfizer’s Wyeth unit and Teva Pharmaceutical Industries Ltd, the world’s largest generic drug maker. The FTC mentioned in its brief “empirical evidence confirms what the pharmaceutical industry has long understood: that in no-(authorized generic) commitment provides a convenient method for branded drug farms to pay generic patent challengers for agreeing to delay entry.”

The FTC said such patent settlements were drug companies agree not to launch their own authorized generic versions constitute a means of playing a generic rival to delay their entry into the market. Further, the regulatory agency said that a court should “carefully consider the economic realities of no-AG commitments and their impact on consumers.”

The instant anti-trust litigation was brought in June by CVS Caremark Corp and Rite Aid Corp alleging that Pfizer and Teva had conspired with each other to keep generic versions of Effexor XR off the store shelves. HEB Grocery Co, Walgren Co, Kroger Co, Supervalu Inc and Safeway Inc had also made similar claims in a lawsuit filed in December before the same court.

In the Effexor case, the judge had sought briefings to evaluate how the case was affected by a recent ruling of the 3^rd Circuit Court of Appeals in which the appeals court held payments made by a branded drug maker to a potential generic rival can be “evidence of an unreasonable restraint of trade” if it led to generic drugs from reaching the market.

The FTC was clear in its opinion on the issue and held that makers of branded drugs where using non-AG settlements to delay generic competition.