FTC Commissioner Speaks on Settlements in Pharmaceutical Patent Cases

The Federal Trade Commission recently published the remarks of Commissioner Jon Leibowitz regarding trends in settlements of patent lawsuits between innovator and generic drug companies.  Commissioner Leibowitz made his remarks in a speech at the 2nd Annual In-House Counsel's Forum on Pharmaceutical Antitrust, on April 24th in Philadelphia.  On the same day, the FTC released its latest annual report on patent settlements between innovators and generics.  While the entire speech is well worth reading, the following comments are especially interesting:

• until the Schering and Tamoxifen cases, almost no settlements involved a cash payment from the innovator to the generic; since those cases, more than two-thirds of settlements have included such payments;
• unless the Supreme Court reverses the Schering and Tamoxifen decisions, the innovator and generic drug companies "will have carte blanche to avoid competition and share resulting profits, and we will see minimal competition before patent expiration";
• rather than settling with only the first ANDA filer, in some cases the innovator company is settling with all ANDA filers to guarantee no generic entry until a date that's usually very near patent expiration;
• since the Federal Circuit decision in Teva v. Pfizer, some innovators have been pursuing a strategy of settling with the first ANDA filer and declining to sue any subsequent filers, which could effectively block all generic entry until patent expiration.

RELATED READING:

• May 5, 2006 New York Times article
• April 28, 2006 BNA article
• April 25, 2006 AP article
• April 25, 2006 Washington Post article