Legal Library: Cases and Proceedings

On 2/2/2009, the Commission filed a complaint in federal district court challenging and agreement between Solvay Pharmaceuticals and two generic drug manufacturers in which Solvay paid for the delayed release of generic equivalents to its own testosterone-replacement drug, AndroGel, typically used in the treatment of men with low testosterone levels due to advanced age, certain cancers, and HIV/AIDS. According to the Commission’s complaint, in an effort to prevent Watson Pharmaceuticals and Par Pharmaceuticals from acquiring patents for their competing testosterone replacement drugs, Solvay paid the companies to delay entry for a nine year period, ending in 2015. 

This case was transferred from the United States District Court for the Central District of California to the Northern District of Georgia.  The district court dismissed the Commission's complaint, and the Eleventh Circuit affirmed, holding that anticompetitive effects within the scope of patent protection are per se legal under the antitrust laws.

On 10/4/2012, the FTC filed a writ of certiorari to the Supreme Court.  On June 17, 2013, the Supreme Court reversed the 11th Circuit, rejecting the scope of the patent test and permitting antitrust review of reverse payment patent settlement agreements.

There are three related administrative proceedings:

• Watson Pharmaceuticals / Actavis Inc.
• Watson Pharmaceuticals, Inc., a corporation, and Robin Hood Holdings Limited, a limited liability company
• Watson Pharmaceuticals, Inc. and Andrx Corporation

The FTC's complaint alleges that Endo Pharmaceuticals Inc. and several other drug companies violated antitrust laws by using pay-for-delay settlements to block consumers’ access to lower-cost generic versions of Lidoderm.  The agreement not to market an authorized generic – often called a “no-AG commitment” – is the form of reverse payment.  The FTC’s complaint alleges that Endo paid the first generic companies that filed for FDA approval – Watson Laboratories, Inc. – to eliminate the risk of competition for Lidoderm, in violation of the Federal Trade Commission Act.  Lidoderm is a topical patch used to relieve pain associated with post-herpetic neuralgia, a complication of shingles.  Under federal law, the first generic applicant to challenge a branded pharmaceutical’s patent, referred to as the first filer, may be entitled to 180 days of exclusivity as against any other generic applicant upon final FDA approval. But a branded drug manufacturer is permitted to market an authorized generic version of its own brand product at any time, including during the 180 days after the first generic competitor enters the market. According to the FTC, a no-AG commitment can be extremely valuable to the first-filer generic, because it ensures that this company will capture all generic sales and be able to charge higher prices during the exclusivity period.  The FTC is seeking a court judgment declaring that the defendants’ conduct violates the antitrust laws, ordering the companies to disgorge their ill-gotten gains, and permanently barring them from engaging in similar anticompetitive behavior in the future.

Endo agreed to settle the charges in a proposed stipulated order to be entered by the court.

The FTC charged that Boral Ltd. and LaFarge SA violated antitrust laws by establishing a joint venture, Monier Lifetile LLC, that combined their concrete roofing tile (CRT) manufacturing divisions. Boral and LaFarge are the two largest producers of CRT in the United States. To settle FTC charges that the joint venture would likely substantially reduce competition in the market for CRT, Monier Lifetile LLC agreed to sell production facilities in Arizona, California and Florida to CRH PLC.

The FTC required Watson Pharmaceuticals, Inc. and Actavis Inc. to sell the rights and assets to 18 drugs to Sandoz International GmbH and Par Pharmaceuticals, Inc, and relinquish the manufacturing and marketing rights to three others, to settle charges that Watson’s proposed $5.9 billion acquisition of Actavis would otherwise be anticompetitive. The settlement protects competition in the markets for 21 current and future generic drugs, used to treat a wide range of conditions ranging from hypertension and diabetes to anxiety and attention deficit hyperactivity disorder (ADHD).

There is a related federal proceeding and two related administrative proceedings:

• Watson Pharmaceuticals, Inc., a corporation, and Robin Hood Holdings Limited, a limited liability company
• Watson Pharmaceuticals, Inc. and Andrx Corporation

Mallinckrodt ARD Inc., formerly known as Questcor Pharmaceuticals, Inc., and its parent company, Mallinckrodt plc, agreed to pay $100 million to settle charges that they violated the antitrust laws when Questcor acquired the rights to a drug that threatened its monopoly in the U.S. market for adrenocorticotropic hormone (ACTH) drugs. Acthar is a specialty drug used as a treatment for infantile spasms, a rare seizure disorder afflicting infants, as well a drug of last resort used to treat other serious medical conditions. The complaint alleges that, while benefitting from an existing monopoly over the only U.S. ACTH drug, Acthar, Questcor illegally acquired the U.S. rights to develop a competing drug, Synacthen Depot. The acquisition stifled competition by preventing any other company from using the Synacthen assets to develop a synthetic ACTH drug, preserving Questcor’s monopoly and allowing it to maintain extremely high prices for Acthar. In addition to the $100 million monetary payment, the proposed stipulated court order, which must be approved by the federal court, requires that Questcor grant a license to develop Synacthen Depot to treat infantile spasms and nephrotic syndrome to a licensee approved by the Commission.

Emerson Electric Co. agreed to sell the switchbox business of Pentair plc to Stamford, Conn.-based Crane Co. in order to settle charges that Emerson’s proposed $3.15 billion acquisition of Pentair would violate federal antitrust law. Emerson and Pentair are manufacturers of industrial valves and control products, including switchboxes, which are widely used in the oil and gas, chemical, petrochemical, power, and other industries. Switchboxes perform a critical safety function, so brand reputation and product reliability are very important to customers. Emerson’s TopWorx and Pentair’s Westlock switchboxes are the most widely-used brands nationwide and, for many customers, the only acceptable brands of switchboxes. Under the FTC order, Emerson must divest Westlock Controls Corporation, the Pentair subsidiary that designs, manufactures, and sells switchboxes, to Crane Co. The order requires Emerson to provide Crane all of Westlock’s production facilities, intellectual property, confidential business information, and the opportunity to hire Westlock employees.