Antitrust Law Daily Wrap Up, ANTITRUST NEWS—Thirty-One States Support FTC Efforts to Obtain Supreme Court Pronouncement on Pay-for-Delay Settlements, (Nov 12, 2012)

By Jeffrey May, J.D.

The attorney general of New York, along with 30 other state attorneys general, urged the U.S. Supreme Court to grant the FTC's petition for certiorari and review a decision of the U.S. Court of Appeals in Atlanta (677 F.3d 1298, 2012-1 Trade Cases ¶77,865), rejecting the agency’s challenge to patent litigation settlements between Solvay Pharmaceuticals and generic manufacturers concerning testosterone-replacement drug AndroGel (FTC v. Watson Pharmaceuticals, Inc., Dkt. 12-416). The U.S. Solicitor General, at the request of the FTC, petitioned the Court for review on October 4. The state attorneys general filed a friend-of-the-court brief, supporting the petitioner, on November 5.

The FTC had challenged an allegedly anticompetitive settlement agreement pursuant to which Solvay Pharmaceuticals agreed to pay would-be generic competitors, Watson Pharmaceuticals and Paddock Pharmaceuticals, not to sell competing generic drugs for a certain number of years. These types of settlements are commonly known as “reverse payment” agreements or “pay-for-delay settlements.”

The FTC petition asks the Court to decide whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud, or instead are presumptively anticompetitive and unlawful. A conflict exists among the federal appellate courts on the issue.

The states contend that the Court should grant certiorari to resolve the circuit split and “lift the uncertainty that currently hangs over drug purchasers and drug manufacturers” on the issue. The states argue that the Court should hold that pay-for-delay settlements are presumptively anticompetitive and unlawful because they are almost always anticompetitive.

“Immunizing pay-for-delay settlements will result in the use of patents to maintain improper monopolies at serious cost to consumers, even when those patents are invalid or not infringed by the generic product that the settlement keeps off the market,” the states assert.

The amici states are: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nevada, New Hampshire, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Washington, West Virginia, and Wyoming.

News: Antitrust