Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ga.: FTC could not discover information underlying reverse payment settlement negotiations, (Jan 4, 2016)

By Linda O’Brien, J.D., LL.M.

In an FTC antitrust action against Solvay Pharmaceuticals, Inc., Watson Pharmaceuticals, Inc., Paddock Laboratories, Inc., and Par Pharmaceutical Companies, Inc. for entering into reverse payment settlements to delay generic competition for the brand name drug AndroGel, the FTC was denied its motion to obtain information concerning the negotiations of the settlements that were privileged. In granting in part and denying in part the motion to compel, the federal district court in Atlanta determined that most of the requested documents and communications contained antitrust counsel advice that was shared among the defendants in a common interest (In re AndroGel Antitrust Litigation (No. II), December 30, 2015, Thrash, T.).

The FTC filed suit against the pharmaceutical company defendants, alleging that they engaged in a “reverse payment” settlement to resolve patent infringement litigation between Solvay—the marketer of brand-name testosterone replacement drug AndroGel—and generic manufacturers Watson, Paddock, and Par. The FTC alleged that the payments delayed entry of generic versions of AndroGel into the market. The FTC moved to compel production of documents concerning the reverse payment settlement negotiations. In response, the defendant drug manufacturers claimed the documents were privileged.

Common interest doctrine. The defendants argued that the requested documents pertained to legal antitrust advice that was shared with a goal to prevent potential antitrust litigation and are protected under the common interest doctrine or joint defense privilege. A party claiming the privilege must demonstrate that (1) the material is privileged, (2) the parties had an identical legal and not solely commercial interest, and (3) the communication was designed to further the shared legal interest. In this case, the defendants established that they shared a common legal interest. While they were adverse during the settlement negotiations, the defendants shared an interest in formulating a defense to any potential antitrust litigation.

According to the court, a draft of the co-promotion agreement between Solvay, Paddock, and Par, as well as a spreadsheet describing the structure of the co-promotion agreement and emails from antitrust counsel suggesting revisions to the agreement were protected by the joint defense privilege. Emails from the defendants’ respective counsel regarding antitrust analysis and advice regarding the draft joint defense agreement, and final settlement and release agreements were also protected under the joint defense privilege. Drafts of the joint defense agreement and letters to the FTC and Department of Justice by counsel were protected by the work product doctrine.

However, certain emails between counsel that related to FDA certification of generic drugs and did not concern any antitrust advice were not protected, the court concluded.

The case is No. 1:09-cv-00955-TWT.

Attorneys: Randall W. Weinsten for the Federal Trade Commission. Julia K. York (Skadden Arps Slate Meagher & Flom LLP) for Actavis, Inc. Adam M. Acosta (White & Case, LLP) for Par Pharmaceutical Companies, Inc. and Paddock Laboratories, Inc. Joshua S. Meltzer (Munger, Tolles & Olson, LLP-CA) for Solvay Pharmaceuticals, Inc.

Companies: Actavis, Inc.; Par Pharmaceutical Companies, Inc.; Paddock Laboratories, Inc.; Solvay Pharmaceuticals, Inc.

Cases: Antitrust GeorgiaNews