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11th Circuit Calls Generic Drug Data Fair Game

(CN) - Documents from a lawsuit that accused drugmakers of paying off competitors to keep generic equivalents off the market may become public, the 11th Circuit ruled.

Solvay Pharmaceuticals, now known as AbbVie Products, a subsidiary of Abbott Laboratories, had an exclusive license to sell AndroGel, a topical testosterone gel. AndroGel is used to treat male hypogonadism, or low testosterone.

While Solvay enjoyed its monopoly under the patent, which was to expire in 2020, its competitors, Watson Pharmaceuticals and Paddock Laboratories, developed generic versions of AndroGel and sought FDA approval.

In 2003, Solvay filed a patent infringement lawsuit against Watson and Paddock to stop them from selling AndroGel's generic equivalents.

Par Pharmaceuticals became a party to the lawsuit by sharing litigation costs with Paddock in exchange for a share of the potential profits.

Solvay settled with Watson and Par/Paddock, which agreed to delay marketing their generic versions until 2015. The settlement agreement included a "reverse payment" provision, which gave Solvay's competitors a share of the monopoly profits, for staying off the market.

The Federal Trade Commission investigated Solvay's settlement, and filed a federal antitrust lawsuit against Solvay and its competitors.

The FTC claimed the drugmakers had conspired to fix the prices of AndroGel and its generic versions by settling "baseless lawsuits." It claimed that such "pay for delay" settlements result in higher drug prices that cost consumers about $3.5 billion per year.

During the FTC investigation, Solvay disclosed confidential documents regarding the settlement and the development and marketing of AndroGel.

The FTC used an April 2006 document containing revenue and profit projections for AndroGel and recommendations concerning Solvay's settlement, known as the Tulip FA, to argue its case.

After the FTC attached the Tulip FA to its second amended complaint, Solvay asked the Northern District of Georgia to seal the document, claiming it contained sensitive information that could harm its business.

The district court dismissed in 2010, finding that the drugmakers had not engaged in "sham litigation", and granted Solvay's request to seal the exhibit. The 11th Circuit affirmed, but the U.S. Supreme Court last year agreed to review the case.

In light of the Supreme Court decision, the FTC asked the district court to unseal the Tulip financial analysis, so it could discuss it openly in the Supreme Court.

The FTC said public interest supported unsealing the document, which contained data similar to information that Solvay already had made public. It contended that Solvay should have expected that the document would become public in judicial proceedings.

The district court granted the FTC's request, finding that unsealing the financial analysis served the public interest, and that the document was presumed to be public because it was relevant to legal decisions. The court noted that the potential for competitive injury to Solvay had decreased with passage of time.

After Solvay appealed, claiming that the district court had abused its discretion and had erroneously considered Solvay's document a judicial record, the 11th Circuit stayed the unsealing pending appeal.

The appeals court affirmed the federal court's decision after dismissing Solvay's argument that the financial analysis was not a judicial record subject to the common-law right of access. Since the FTC's complaint is a judicial record, the exhibits attached to it must also be treated as such, according to the March 21 ruling.

Solvay failed to persuade the three-judge panel that the FTC had attached the document to the complaint solely to coerce Solvay to disclose confidential information after getting it to rely on assurances of confidentiality, the 33-page ruling states.

Solvay also argued that the district court should have required the FTC to show extraordinary circumstances, not merely good cause, to justify unsealing the document.

But the 11th Circuit said that Solvay had waived that argument by not raising it in federal court.

The judges found that the district court was right to compare the strength of the parties' interests to their interests at the time of the protective order, and in concluding that "the passage of time has reduced the likelihood of serious injury to Solvay."

The company recently had disclosed AndroGel sales information and had introduced a new version of the product, making the information in the Tulip FA less sensitive. What's more, the author of the financial analysis had testified that she could not reverse-engineer Solvay's profit margins using only that document, according to the ruling.

The court also concluded that Solvay could not have relied on a protective order in disclosing the document, because it had made it available to the FTC - which had not promised complete confidentiality - before it applied for a protective order.

"The district court's decision to unseal the Tulip FA enhanced the public's ability to understand the judicial process and a significant legal issue that will shape business practices in the future: whether the FTC is right that so-called reverse payments are anticompetitive and, therefore, violative of Section 1 of the Sherman Act," U.S. Circuit Judge Stanley Marcus wrote for the court.

Marcus concluded that the federal court had not abused its discretion in finding that "the passage of time had altered the balance enough so that the value of public access to the Tulip FA exceeded the value of confidentiality to Solvay."

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