Senators Introduce Bill to Ban Reverse Payment Settlements of Hatch-Waxman Cases
In response to the Supreme Court's denial of certiorari in FTC v Schering earlier this week, four senators introduced Senate bill S3582 yesterday, which seeks to prohibit brand name drug companies from entering into "reverse payment" settlements with generic drug companies. In FTC v. Schering, the FTC had petitioned the Court to decide whether a reverse payment settlement from Schering to generic drug makers was in violation of antitrust laws. Denial of certiorari by the Supreme Court left standing an Eleventh Circuit decision holding that the settlement did not violate antitrust laws.
S3582 was introduced by Senator Kohl (D-WI); co-sponsors were Senators Leahy (D-VT), Grassley (R-IA), and Schumer (D-NY). In Sen. Kohl's press release announcing introduction of the bill, its sponsors decried the effect that reverse payment settlement agreements have on market entry of lower-cost generic drugs, asserting that such settlement agreements undermine true competition, and thus should not be allowed.
The current version of S3582 would amend Section 5 of the Federal Trade Commission Act (15 U.S.C. 45) by adding a new sub-section making it an unfair method of competition for "a person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a 'patent infringement claim' in which (a) an ANDA filer receives anything of value; and (B) the ANDA filer agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time."
The proposed bill would exclude from its reach any agreement in which the value paid to an ANDA filer by the NDA holder "includes no more than the right to market the ANDA product prior to expiration of the patent that is the basis for the patent infringement claim." The bill defines "patent infringement claim" to be "any allegation [of possible patent infringement] made to an ANDA filer, whether or not included in a complaint filed with a court of law." The statute thus seeks to reach beyond reverse payment agreements resolving patent infringement litigation, to include pre-litigation settlement agreements as well.
S3582 has been referred to the Committee on Commerce, Science, and Transportation.
NOTE: Thanks to a Kohl staffer for providing an advance copy of the bill.
Comments