Breaking the Silence: Rush Bill Would Curb Drug Patent Settlement Agreements

By Kurt R. Karst –      

Congress has been silent on new legislation addressing drug patent settlement agreements (aka “reverse payment agreements” or “pay-for-delay agreements”) since the U.S. Supreme Court issued its June 2013 opinion in Federal Trade Commission v. Actavis, Inc., 570 U.S. ___ (2013).  As we previously reported, the Court declined to hold that reverse payment settlement agreements are presumptively unlawful, and that “Courts reviewing such agreements should proceed by applying the ‘rule of reason,’ rather than under a ‘quick look’ approach.”  Notwithstanding the Court’s holding on the appropriate test to apply to drug patent settlement agreements, however, the Court also held that the FTC should have been given the opportunity to prove its antitrust claims and that the exclusionary potential of a patent does not immunize a drug patent settlement agreement from antitrust attack.  (That case in now progressing as reported yesterday by Law360.)  The silence from Capitol Hill was broken earlier this week when Representative Bobby Rush (D-IL) introduced “new” legislation: H.R. 3709, the Protecting Consumer Access to Generic Drugs Act of 2013.

H.R. 3709, which has apparently been ready for introduction since July 2013 (according to the date stamp on the version obtained by the FDA Law Blog), is the same bill Rep. Rush introduced in February 2012: H.R. 3995, the Protecting Consumer Access to Generic Drugs Act of 2012.  In fact, other than a change from 2012 to 2013, H.R. 3709 appears to be identical to H.R. 3995.  The same thing happened in the U.S. Senate with that chamber’s drug patent settlement bills: S. 214, the Preserve Access to Affordable Generics Act, which was introduced in February 2013 (see our previous post here), and S. 504, the Fair And Immediate Release of Generic Drugs Act (“FAIR Generics Act”), which was introduced in March 2013 (see our previous post on an earlier version of the bill).

As we previously reported, the Protecting Consumer Access to Generic Drugs Act is different than the current versions of the Preserve Access to Affordable Generics Act and the FAIR Generics Act, although the House bill does harken back to a February 2009 version of the Preserve Access to Affordable Generics Act.  Specifically, the Protecting Consumer Access to Generic Drugs Act does not include the controversial presumption that an agreement, if challenged by the FTC, is anticompetitive and unlawful unless it can be demonstrated by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.  Instead, the Protecting Consumer Access to Generic Drugs Act of 2013 simply says:

It shall be unlawful for any person to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which – (1) an ANDA filer receives anything of value; and (2) the ANDA filer agrees not to research, develop, manufacture, market, or sell, for any period of time, the drug that is to be manufactured under the ANDA involved and is the subject of the patent infringement claim.

There are exceptions to this blanket rule.  H.R. 3709 would not prohibit agreements in which the value received by the ANDA sponsor includes no more than the right to market the drug product before the expiration of certain patents and non-patent marketing exclusivities.  A violation of the blanket rule (unless otherwise excepted) would be treated as an unfair and deceptive act or practice and an unfair method of competition in or affecting interstate commerce prohibited under the FTC Act.  The bill would also permit the FTC to promulgate regulations to further implement the exceptions included in the bill.