Legal Library: Cases and Proceedings

In the complaint dated March 30, 2001 the Commission alleged that Schering - Plough, the manufacturer of K-Dur 20 - a prescribed potassium chloride, used to treat patients with low blood potassium levels - entered into anticompetitive agreements with Upsher-Smith Laboratories and American Home Products Corporation to delay their generic versions of the K-Dur 20 drug from entering the market. According to the charges, Schering-Plough paid Upsher- Smith $60 million and paid American Home Products $15 million to keep the low-cost generic version of the drug off the market. The charges against American Home Products were settled by a consent agreement. An initial decision filed July 2, 2002 dismissed all charges against Schering - Plough and Upsher-Smith Laboratories. On December 8, 2003 the Commission reversed the administrative law judge’s initial decision and found that Schering-Plough Corporation entered into agreements with Upsher-Smith Laboratories, Inc. and American Home Products to delay the entry of generic versions of Schering’s branded K-Dur 20. According to the opinion, the parties settled patent litigation with terms that included unconditional payments by Schering in return for agreements to defer introduction of the generic products. The Commission entered an order that would bar similar conduct in the future. The United States Court of Appeals for the Eleventh Circuit set aside and vacated the Commission decision finding that the agreements were immune from antitrust review if their anticompetitive effects were within the scope of the exclusionary potential of the patent. The Commission filed a petition for writ of certiorari with the U.S. Supreme Court in August 2005, which the Court denied.

Complaint filed in the U.S. District Court for the District of Columbia charged Mylan with restraint of trade, monopolization and conspiracy to monopolize the market for two generic drugs used to treat anxiety, lorazepam and clorazepate, through exclusive dealing arrangements.  The Commission alleged that Mylan, Gyma Laboratories of America, Inc., Cambrex Corporation and Profarmaco S.R.L. conspired to deny Mylan’s competitors ingredients necessary to manufacture lorazepam and 40 clorazepate. The complaint sought consumer redress of at least $120 million and to enjoin the alleged illegal exclusive licensing agreements. The district court upheld the Commission’s authority to seek restitution in antitrust injunction actions under Section 13(b).  The Commission approved a $100 million settlement. The opinion settled Commission concerns that Mylan, Gyma Laboratories of America, Inc., Cambrex Corporation and Profarmaco S.R.L. conspired to deny Mylan’s competitors ingredients necessary to manufacture lorazepam and 40 clorazepate. On February 1, 2002, the court granted approval to a plan of distribution to injured consumers who paid the increased prices and state agencies, including Medicaid programs, that purchased the drugs while the illegal agreements were in effect. The funds were distributed by the states.

Abbott and Geneva Pharmaceuticals settled charges that the two firms entered into an illegal agreement to stop the marketing and development of a competing generic drug. According to the complaint, Abbott, manufacturer of Hytrin – the brand name for terazosin HCL, a prescription drug used to treat hypertension and benign prostatic hyperplasia, entered into an agreement with Geneva Pharmaceuticals whereby Abbott would pay Geneva millions of dollars not to market a generic version of Hytrin. The orders bars Abbott and Geneva, among other things, from entering into agreements in which a generic company agrees with a manufacturer of a branded drug to delay or stop the production of a competing drug.