Agency Does Not Take Enforcement Action, But Urges Industry to Closely Consider Advisory
The Federal Trade Commission’s Bureau of Competition has notified Sanofi-Aventis U.S. LLC, Watson Pharmaceuticals, Inc., and Synthon Holding B.V., that it believes the companies violated federal law by failing to inform antitrust authorities about drug patent agreements involving Sanofi’s insomnia drug Ambien CR. However, the FTC staff told the companies that it decided not to recommend enforcement action for several reasons, including its finding that the violation does not appear to have harmed consumers or competition, nor benefitted the companies. To help ensure future compliance, the FTC staff provided public guidance to the pharmaceutical industry.
In advisory letters sent to Sanofi, Watson, and Synthon, FTC Bureau of Competition Director Richard Feinstein stated that the Bureau believes that by failing to notify authorities about the agreements in connection with patent infringement lawsuits concerning the drug Ambien CR, the companies violated the reporting requirements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).
The MMA requires that brand name and generic drug companies file drug patent agreements with the FTC and U.S. Department of Justice within 10 business days when the agreement involves a drug for which the generic has submitted the Abbreviated New Drug Application containing a “Paragraph IV” certification. A Paragraph IV certification would state that a patent asserted to cover the brand drug is either invalid or not infringed by the generic applicant. The failure to file timely drug patent agreements may result in a civil penalty of up to $11,000 for each day that a required filing has not been made.
In this case, the Bureau decided to issue the advisory letters instead of recommending that the Commission take enforcement action. The Bureau listed three key reasons for the decision:
- the companies’ failure to file does not appear to have harmed consumers or competition, nor benefitted the companies;
- the failure to file does not appear to have been a deliberate effort on the part of the companies to evade the requirements of the MMA; and
- guidance to the industry via the advisory letters may serve a broader enforcement purpose.
“The Bureau of Competition recognizes the importance of clear guidance concerning the types of agreements that are subject to the MMA filing requirement,” said Feinstein. “We expect that these companies, and the pharmaceutical industry more broadly, will closely consider the contents of these advisory letters in connection with future agreements that may be subject to the MMA. We will consider enforcement recommendations, including appropriate penalties, in the future when the MMA filing requirements have not been met.”
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