Patent Law Practice Center

FTC charges Endo Pharmaceuticals with “pay for delay” antitrust violation

On March 30, 2016, the Federal Trade Commission filed a complaint in the United States Federal District Court for the Eastern District of Pennsylvania alleging that Endo Pharmaceuticals Inc. and several other drug companies violated antitrust laws by using “pay for delay” agreements to block consumers’ access to lower-cost generic versions of Opana ER and Lidoderm. The complaint also names Allergan plc, the parent company of Watson, and Endo International plc, the parent company of Endo Pharmaceuticals Inc. According to the FTC, this enforcement action is the first FTC case challenging an agreement not to market an authorized generic – often called a “no-AG commitment” – a form of reverse payment. A no-AG (“no authorized generic”) commitment involves a branded firm agreeing that it will not launch its own generic alternative when the first generic begins to compete. Because introduction of an authorized generic from the branded company would cut into the revenues of a competing generic, a no-AG commitment can induce the generic company to delay its entry.

This enforcement action by the FTC comes thanks to a June 2013 ruling from the United States Supreme Court in FTC v. Actavis, Inc.  In a nutshell, writing for the majority, Justice Breyer explained that there is no valid reason for the FTC to be denied the opportunity to pursue reverse payments as an antitrust violation.  Breyer (joined by Justices Kennedy, Ginsberg, Kagan, and Sotomayor) determined that reviewing courts should apply the rule of reason when determining whether reverse payments violate antitrust law. See Supremes Say Reverse Payments May be an Antitrust Violation. Prior to the ruling in FTC v. Actavis, it was widely believed that the FTC did not have authority to challenge reverse payments as settlements of patent disputes. See Pharma Reverse Payments Are Not an Antitrust Violation.

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AstraZeneca Loses at the Federal Circuit on Omeprazole

On December 19, 2013, Hanmi Pharmaceuticals received good news in the form of a decision by the U.S. Court of Appeals for the Federal Circuit (CAFC). Invoking 35 U.S.C. §271(e)(2), AstraZeneca had alleged that a drug Hanmi proposed to market falls within claims of U.S. Patent Nos. 5,714,504 and 5,877,192. After the district court construed the claim terms “alkaline salt” in the ’504 patent and “pharmaceutically acceptable salt” in the ’192 patent, the parties consented to the entry of a final judgment of non-infringement based on the constructions. This case is of particular interest to the industry because omeprazole is the active ingredient in the popular over-the-counter heartburn medication know as Prilosec.

Creating a salt out of omeprazole can enhance stability during storage and transportation, a useful property in pharmaceutical compounds.  AstraZeneca discovered that certain salts of an omeprazole enantiomer have improved pharmacokinetic and metabolic properties which will give an improved therapeutic profile such as a lower degree of interindividual variation. During prosecution, AstraZeneca conducted experiments that led it to conclude that one of the two enantiomers gave particularly good results. The preferred enantiomer became known as “esomeprazole.”