FTC Files Complaint Challenging Settlement Agreement; Also, So-Called “Pay for Delay” Settlement Legislation Introduced in the U.S. Senate

February 4, 2009

By Kurt R. Karst –      
On February 2, 2009, the Federal Trade Commission (“FTC”) announced that the Commission filed a complaint in federal district court challenging agreements in which Solvay Pharmaceuticals, Inc. allegedly paid two generic drug companies to delay generic competition to Solvay’s drug product ANDROGEL (testosterone gel) 1%.  Specifically, the FTC’s complaint alleges that in 2006, Solvay agreed to share its profits with certain  generic competitors – one of whom already has ANDA approval and is eligible for 180-day exclusivity – provided they would not launch their generic versions until 2015.  Under FDC Act § 505(j)(5)(D)(i)(V), which the Medicare Modernization Act (“MMA”) made retroactive to pre-MMA cases, if there is a final court decision that an agreement violates antitrust laws, then 180-day exclusivity is forfeited.

On the heels of the FTC’s announcement, Senators Herb Kohl (D-WI) and Chuck Grassley (R-IA) introduced S. 369, “The Preserve Access to Affordable Generics Act.”  According to a press release issued by Sen. Kohl, “[t]he legislation would make illegal anti-competitive, anti-consumer patent payoffs in which brand name drug companies pay generic manufacturers millions of dollars to keep generic competition off the market.”  (Check out our new “FDA Legislation Tracker” for a copy of the bill and other FDA legislation.)  Sen. Kohl introduced similar legislation in the 110th Congress – S. 316.  Rep. Henry Waxman (D-CA) introduced the House version of the bill – H.R. 1902.  Similar to previous versions, the latest iteration of the bill (S. 369) would:  

• Amend the Clayton Act to add new § 29 (Unlawful Interference With Generic Marketing) making it unlawful for a person, in connection with the sale of a drug product, to be a party to any agreement resolving or settling a patent infringement claim in which: (1) an ANDA applicant receives anything of value; and (2) such generic applicant agrees not to research, develop, manufacture, market, or sell the generic product for any period of time;

• Amend MMA § 1112 to set forth additional filing requirements related to agreements between brand name and generic drug companies; and

• Amend the 180-day exclusivity forfeiture provision at FDC Act § 505(j)(5)(D)(i)(V) to provide that an ANDA applicant that is a “first applicant” forfeits exclusivity if an agreement violates new § 29 of the Clayton Act.

Categories: Hatch-Waxman