FTC Gets New Wind to Fight Drug Patent Deals

WASHINGTON (CN) - The Supreme Court will decide whether to revive claims that name-brand drugmakers restrain trade by paying off competitors who would develop generic versions of their products.

The Federal Trade Commission sprang into action over a deal concerning Androgel, a testosterone-replacement gel is used to treat male hypogonadism, the condition in which men express low levels of testosterone.

Though the Food and Drug Administration approved the Solvay Pharmaceuticals drug in 2000, several companies began developing generic versions of AndroGel before Solvay's patent issued in 2003.

Solvay filed a patent-infringement action against Watson Pharmaceuticals, Paddock Laboratories, and Paddock's partner Par Pharmaceutical Cos. in 2003, automatically preventing the generics from entering the market for 30 months.

The distributors eventually withdrew their challenge to Solvay's patent and agreed in a 2006 settlement to stay off the market with their generic versions until 2015.

This deal also included business promotion agreements to share profits of AndroGel.

But the Federal Trade Commission said the companies had conspired to fix the price of AndroGel and its generic equivalents by settling "baseless lawsuits."

It says such "pay for delay" settlements, also known as reverse payment settlements, result in higher drug prices that cost consumers about $3.5 billion per year.

The drug companies counter that payment settlements simply enable patent holders to protect and maintain their lawful exclusionary rights under patent law.

In February 2010, a federal judge in Georgia dismissed the FTC's antitrust claims.

None of the direct and indirect purchasers of AndroGel joined the FTC in the ensuing appeal, which the 11th Circuit ultimately dismissed in April 2012.

As is its custom, the Supreme Court did not comment on its decision Friday to grant the FTC certiorari. It noted only that Justice Samuel Alito did not participate in the consideration or decision of the FTC's petition.

There were spinoff claims from direct purchasers of Androgel, but federal judge dismissed them on Sept. 28.

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