FTC Presses 3rd Circuit on Reverse-Payment Drug Settlements

PHILADELPHIA (CN) — The Federal Trade Commission urged the Third Circuit Wednesday to revive claims that two drugmakers made improper reverse-payment settlements to preserve their monopoly on a blockbuster testosterone drug.

The FTC brought the suit in 2014, the same year that Teva agreed to delay launching a generic version of AndroGel as part of a $175 million deal with AbbVie and Besins Healthcare, which together own the Androgel patent and agreed to supply Teva with a generic version of another drug, TriCor.

Though the FTC calculated that the sham settlement earned AbbVie and Besins earned some $1.2 billion in illegal profits, U.S. District Judge Harvey Bartle ordered AbbVie at summary judgment to pay $462 million and Bensins to pay $31.5 million.

U.S. Circuit Judge Thomas Hardiman attempted to get to the point of the FTC’s argument.

“You want an injunction that prohibits them from filing litigations they shouldn’t file,” asked Judge Hardiman, a George W. Bush appointee.

FTC lawyer Matthew Hoffman agreed, saying an injunction was warranted based solely on the likelihood that the companies would do it again.

“There is no independent explanation as to why AbbVie would want to accelerate completion on TriCor other than to protect competition to AndroGel,” he said.

Hoffman later sparred with U.S. Circuit Judge Thomas Phipps on the responsibiliy of  specifying a remedy.

“It strikes me that if we’re going to do a legal-process analysis, the best person to do so is the one with legal training,” said Judge Phipps, a Trump appointee.

WilmerHale attorney Seth Waxman, representing the drug companies, stressed that his clients did no wrong.

“The infringement litigations were not shams, and the FTC failed to prove a monopoly power,” said Waxman, who added that the FTC will never be entitled to any relief because it failed to prove it suffered any injury.

Judge Phipps called this argument premature.

“Seems a little early to say no remedy is available ever,” he said.

Waxman disagreed, pointing out that the FTC could not prove that the drug companies would file a sham litigation again.

“If there is no likelihood of reoccurrence, then therefore there’s no authority to impose equitable relief,” said Waxman.

On rebuttal, Hoffman said that an injunction could still be given even if no monetary remedy was given.

“Even if there’s not monetary relief we can still seek injunction relief against reverse payments,” said Hoffman.

The panel was rounded out by U.S. Circuit Judge David Porter, a Trump appointee.

Neither Hoffman nor Waxman wished to give a comment after arguments.

Besins was represented by Gregory Neppl of the firm Foley and Lardner.

If the court rules in favor of the drug companies it would strip the FTC’s ability to use disgorgement as a way to get money for those involved in scam litigations. The FTC has been fighting scam litigations since 2012 since it changed its policy on monetary remedies.

In August, the Seventh Circuit vacated a $5 million judgment against the Credit Bureau Center, which the FTC sued for offering consumers a free credit check only to then automatically enroll them in a monthly subscription service. The Chicago-based court found that the FTC lacked authority to seek restitution from scam litigations by implementing a section of its law that allows it to obtain injunctions.

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