Patent Law Practice Center

FTC revives pay-for-delay complaint on generic Lidoderm

The Federal Trade Commission (FTC) recently announced that it had taken steps to resolve antitrust charges involving business activities employed by Irish/U.S. drugmaker Endo International designed to delay the entry of generic pain medications into the U.S. to preserve monopoly profits. The FTC filed a complaint for injunctive relief and a motion for entry of stipulated order for permanent injunction against Endo and others in the U.S. District Court for the Northern District of California (N.D. Cal.). These actions revive charges from a lawsuit filed by the FTC last March against Endo involving pay-for-delay patent settlements.

The FTC’s complaint identifies an anti-competitive reverse-payment agreement between Endo and Watson Laboratories, Inc. of Corona, CA, a company which was poised to introduce a generic version of Endo’s Lidoderm lidocaine patch into the U.S. market by the middle of 2012. Watson had filed an abbreviated new drug application (ANDA) for a generic Lidoderm patch with the FDA in January 2010, an application which included a paragraph IV certification claiming that Endo’s patent covering Lidoderm is invalid, unenforceable or uninfringed by Watson’s generic version. Endo earned $825 million from sales of Lidoderm during 2011, making up 30 percent of the company’s profits that year, according to the FTC’s suit. (more…)

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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