GPhA defends patent settlements as Supreme Court date nears

High court to hear FTC v. Actavis on March 25

NEW YORK — The stakes are high in a case involving generic drug maker Actavis and the Federal Trade Commission that will soon go before the Supreme Court, the head of a generic drug industry lobbying group said in a conference call with reporters Tuesday.

The case, FTC v. Actavis, will go before the high court on March 25 and may decide the future of patent settlements between branded and generic drug companies. The Generic Pharmaceutical Association filed an amicus brief with the court last week defending the settlements as beneficial to consumers.

"I cannot emphasize enough the enormous consequences with respect to this Supreme Court decision," GPhA president and CEO Ralph Neas told reporters Tuesday.

The FTC petitioned the Supreme Court to review the case in October 2012, arguing that antitrust rules were violated when Solvay Pharmaceuticals — now owned by AbbVie — paid Watson Pharmaceuticals, which has since changed its name to Actavis, millions of dollars per year to hold off launching its generic version of the drug AndroGel (testosterone gel) until 2015 as part of a settlement in a patent-infringement case filed against Watson when it originally tried to challenge the drug's patent. According to Food and Drug Administration data, AndroGel's patent will expire in August 2020, and the patent covering the drug's use in children will expire about six months later.

Such deals between generic and branded drug companies are common, but have attracted the scrutiny of regulators and Congress who call them "pay-for-delay" settlements. The FTC and its outgoing chairman, Jon Leibowitz, have been long-standing and vocal opponents of the deals, which they say keep generic drugs out of the hands of consumers. But drug makers say the deals actually help bring generic drugs to market months or even years ahead of patent expiry 76% of the time. By contrast, Neas said, citing a study by the Royal Bank of Canada, when the cases go to trial, the generic drug company wins only 48% of the time, while there has been no case of a generic drug company delaying launch beyond the expiration of a branded drug's patent.

As with the Actavis case, the payment may be monetary, but it also may come in the form of a licensing agreement or a promise by the branded drug maker not to launch a so-called "authorized generic," essentially the branded drug marketed under its generic name at a reduced price.

Neas said the FTC's position was based on a study dating back to 2002 and didn't take into account events that have happened since. "Their study, their methodology, their analysis [are] built on a house of cards," Neas said.

"This case will determine how an entire industry does business," he said.

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