Appeals Court Upholds Pay-For-Delay Deals
12 CommentsBy Ed Silverman // April 30th, 2010 // 7:17 am
In a blow to the Federal Trade Commission, the US Second Circuirt Court of Appeals has upheld the legality of so-called pay-for-delay deals that thwart the introduction of generic rivals. But at the same time, the court suggested the issue needed further review (see the ruling).
The ruling was made after reviewing a deal in which Bayer paid Barr Pharmaceuticals, which is now owed by Teva Pharmaceuticals, to drop its patent challenge to the Cipro antibiotic. Barr challenged the Cipro patent in October 1991 and struck a deal with Bayer in January 1997, about two weeks before the case was set to go to trial.
The ruling is yet another setback for the Federal Trade Commission, which has been pushing aggressively to end pay-to-delay deals (look here). Two months ago, a federal judge dismissed an antitrust lawsuit filed by the FTC against Abbott Labs’s Solvay unit for allegedly conspiring with several generic drug makers to delay competition for a testosterone-replacement med (see here). And the White House included what became a scuttled proposal to make these deals illegal as part of its health care reform package.
However, the three-judge panel, in an unusual move, invited entities purchase drugs and had challenged the settlement to ask that the case be reviewed by the full circuit, citing the “exceptional importance” of the antitrust implications.
Justice in MI
Having read at least part of the ruling, I’m a bit confused.
Thus the relevant “delay” extend beyond previous date of patent expiration? Or only bar challenges up to that point?
patrons99
Kudos to FTC for trying to outlaw “pay to delay”. I hope they don’t give up. Even if upheld by an en banc ruling of the 2nd Circuit, the matter is important enough for the Supreme Court to rule on. Who is victimized by “pay to delay”? ALL of us.
Vic
Justice,
Typically, it seems like the “delay” will only extend to the point at which the patent expires. In essence, any further delay would give the FTC further reason to challenge the settlement and payments because at that point you are effectively creating an “absolute” monopoly since you could then pay your competition to stay out of the market. This is outlawed in far too many layers to even try to discuss here.
But I think the point here is more that the brand manufacuter has been able to choose to pay a percentage of the profits of the product to retain, in effect, a monopoly on the market even in the face of a patent challenge that “prima facia” appears to be a valid challenge or in other words, the “generic” player has some level of expectation that the patent is either not violated or is unenforceable. Otherwise, why would the brand manufacturer consider such a policy?
Stephany
http://bipolarsoupkitchen-stephany.blogspot.com/2010/04/jim-edwards-astrazenecas-man-behind.html
V-fluence President Jay Byrne accuses a mental health blogger of hacking, see the story on Jim Edwards site along with my own!
http://bipolarsoupkitchen-stephany.blogspot.com/2010/04/jim-edwards-astrazenecas-man-behind.html
One simple click on the link and I could read the document in question, embarrassing for Byrne, who was hired by AstraZeneca to monitor sites discussing Seroquel. I found my blog in the list, as well as PharmaGossip’s, who has also written about this story.
Anne PME
Would it be easier to fix the loophole that allows for all of these types of lawsuits so that the patent expiration date is more concrete?
This way companies might have more money to spend on research, development, production and S/H….i.e. more resources spent on producing and distributing (where applicable) a high quality product. Unfortunately, it would leave less money for the attorneys and lobbists.
The new HCR bill includes the creation of an FDA framework for the FDA approval of biosimilars. Does anyone know if these types of legal loopholes still exist with regard to biosimlars?
Condor
Back on Cipro OS, proper — here is some January 2010 background on how legacy Schering-Plough entities settled with the makers of Cipro OS, on the eve of trial, over claims that Schering-Plough had been short-paying (underpaying) on the license-roylaties payment streams.
No surprise here, but it was yet another example of torturing the clear language of the contract, in an ultimately vain attempt to avoid paying a fiar fee for the intellectual property rights to the drug.
All tangled up in blue. . . .
Namaste
Confidential N.B.: Apparently, some of my blog’s posts were captured by the V-fluence data-miners, as well.
Gee — Really? I’m flattered. I think.
Condor
Now, in partial reply to JiM’s question, at the top of the comments –
The three-judge panel concluded the Cipro OS ruling with these words: “. . .we believe there are compelling reasons to revisit Tamoxifen with the benefit of the full Court’s consideration of the difficult questions at issue and the important interests at stake. . . .”
That’s judicial pig-latin for “we think the Tamoxifen reverse patent payment case was wrongly decided (in fact, we think it was based on a misunderstanding of how Hatch-Waxman works), but we don’t have the authority to overrule it, as a three judge panel. . . .”
You may safely bet that the full en banc court will now very shortly be asked to take up the issue of whether Tamoxifen was decided in error — an error of law (and thus always amenable to later reversal) — on rehearing.
This is Act II, of a three Act play.
Namaste
patrons99
Great post, Stephany! Ed’s Pharmalot blog is undoubtedly closely “monitored”, too. One can only imagine what sort of nefarious and dastardly uses such info is being put to. How perfectly ghoulish!
Byrne was apparently former director of public affairs for Monsanto. First Monsanto, now AZ, imagine that…Hmmm. A very specialized area of “expertise”, I’m sure.
Where do we suppose pharma stands on the topic of RFID chip implants, GMOs, and the food supply? Big Food and Big Pharma. Think of all the synergistic possibilities.
Condor
patrons99 — GMO is (to my way of thinking), in fact, pharma — it is a drug, not a food.
So, I see way more than just synergies. “You’re not paranoid, if they reall are out to get you. . . .” Heh!]
Namaste
patrons99
Condor - thanks for your insights. There’s probably little doubt as to where Big Pharma and Big Food stand on Codex Alimentarius. No, I don’t think I’m paranoid. I do pray a lot, however. I pray for us all.
Stephany
I find it fascinating that a billion dollar company appears threatened by citizen bloggers.
Anyway, had to throw this out for discussion, thanks for the feedback here!
Justice in MI
Thanks for those who answered my question–Vic and Condor. I admit to still being a bit confused about the situation, but that may be the nature of the beast.