Two Recent Decisions
Motions to dismiss were recently decided in two cases brought by the FTC challenging patent settlements that were alleged to include payments to the generic company. Although these courts reached different results, both expressly rejected the FTC’s theory of liability.
In February a federal court in Georgia dismissed an antitrust challenge brought by the FTC and others to a patent settlement relating to the drug Androgel. In In re Androgel Antitrust Litigation, MDL Docket 2084, the plaintiffs challenged a patent settlement between Solvay Pharmaceuticals and two generic firms pursuant to which (i) the generics agreed to enter in 2015 (five years before patent expiry), and (ii) the parties agreed to several side agreements involving payments to the generic firms in return for providing certain services.
The FTC contended that the side arrangements were ways to compensate the generic firms for a delayed entry date. The court, however, following the reasoning of the prior cases, dismissed the antitrust challenge due to the lack of adequate allegations that the settlement impacted competition outside of a valid patent.
In the second case, decided in March, a federal court in Pennsylvania allowed an antitrust challenge to proceed against a patent settlement relating to the drug Provigil but only based on a theory that the settlement impacted competition outside the scope of a valid patent. According to the court in King Drug Co. of Florence, Inc. v. Cephalon, 06 Civ. 1797, the settlement agreements included side arrangements plus a compromise entry date for the settling generic companies. The court expressly rejected FTC’s theory of liability, stating that “a reflexive conclusion that the agreements in question are per se antitrust violations, as urged by Plaintiffs, and in particular the FTC, ignores the ‘exclusionary’ patent rights afforded to Cephalon.” The court did, however, allow the case to proceed based on allegations that competition was impacted outside the scope of the patent.