FTC Pharmaceutical Patent Settlement Analysis
The FTC released its yearly report on pharmaceutical company patent settlements. According to the press release:
In fiscal year 2006, there were 28 final settlements, and in half of those – 14 – the generic both received compensation and agreed not to market its product for a period of time. In contrast, only three of the eleven settlements in 2005 and none of the fourteen settlements in 2004 had both provisions. The compensation to the generic took different forms, including: 1) payments for co-promoting the brand product, 2) payments for supplying, or being available to supply, the brand with raw material or finished drug product; 3) an agreement by the brand not to compete with an authorized generic, 4) payments for intellectual property to the brand, and 5) payments as part of a co-development project between the brand and the generic. … Further, for the first time since the Federal Trade Commission’s investigation into pharmaceutical patent settlements became public, there were settlements that restricted the generic from marketing products that were not the subject of the litigation. This restriction appeared in five of the settlements, and, in all them, the generic received compensation.
The entire report is also online (I particularly like the two charts).
Update: Reuters reports that:
The chairman of the Senate Judiciary Committee said on Wednesday he will introduce legislation to prevent drugmakers from striking deals that restrict the introduction of cheaper generic drugs. The bill planned by Sen. Patrick Leahy, a Vermont Democrat, targets an increasingly common tactic used by brand-name drug makers — legal settlements that involve payments to generic rivals to restrict the sale of generic alternatives.
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January 19th, 2007 at 2:51 pm
This shift is not surprising, given that the FTC Act allows Commission decisions to be reviewed “within any circuit where the method of competition or the act or practice in question was used or where such person, partnership, or corporation resides or carries on business.” 15 U.S.C. s 45. The most permissive rule–first Schering-Plough and now Tamoxifen–is thus the effective rule, at least for the purposes of FTC enforcement.
Shameless plug: a note forthcoming in Volume 12 of the Stanford Journal of Law, Business, and Finance goes into much greater detail.
January 21st, 2007 at 11:51 am
Michael, your article sounds interesting; when it is published if you can send us a link (or a copy)? I know we’d be interested. On a more substantive level, I think you make an good point: avoid the 6ht Circuit (i.e., Cardizem) and the settlement will be favorably viewed by the courts.
January 26th, 2007 at 11:25 am
Will do.