Federal Trade Commission Files Amicus Brief in Ciprofloxacin "Reverse Payment" Case

The Federal Trade Commission announced last week that it recently filed an amicus brief in In re Ciprofloxacin Hydrochloride Antitrust Litigation, currently pending in the Federal Circuit.  In the case, direct purchaser plaintiffs of Cipro (ciprofloxacin) alleged that settlements of patent litigation between Bayer and several generic drug companies violated federal and state antitrust laws.  The case is an appeal of a 2005 decision granting motions for summary judgment filed by Bayer and the generic defendants.

According to the FTC's brief, the case involves agreements between Bayer and generic manufacturers Barr Labs and The Rugby Group (which has since been acquired by Watson Pharmaceuticals).  The FTC states that under the agreements (executed in January 1997), Bayer paid the generic companies $398 million to agree not to manufacture any form of Cipro and for Barr's agreement to convert its paragraph IV certification (challenging the validity of the U.S. Patent No. 4,670,444) to a paragraph III certification (permitting Barr to market its generic drug only upon expiration of the '444 patent, in December 2003).  The FTC states that the case "illustrates the kind of abuse of the Hatch-Waxman law that prompted congressional intervention in 2003," when it required such agreements to be submitted to the FTC for review.

In short, FTC's brief makes three arguments:

• The district court erred in holding that patent settlement agreements containing exclusion payments are immune from antitrust scrutiny;
• Paying a potential competitor not to compete is a well established antitrust violation; and
• The district court misconstrued the policies and incentives of the Hatch-Waxman Act and misconceived the practical implications of its ruling.

The FTC has continued to pursue court review of reverse payment cases since the Supreme Court denied certiorari in the Tamoxifen and FTC v. Schering cases.  The Senate has also taken interest, but a bill

that would have banned reverse payment settlements stalled last year.

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[Sahil]

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