FTC Continues Its Pressure Campaign on “Reverse Payment” Patent Suit Settlements

Cross-posted by Forbes.com on WLF’s Contributor Site

The Legal Pulse has spilled a lot of digital ink opining on the Federal Trade Commission’s seeming obsession with the settlement of patent suits between “branded” and generic drug makers that include “pay-for-delay” agreements. We’ve frankly never been very fond of that term because while something of value does exchange hands, there is no “delay.” In each antitrust case the Commission or private plaintiffs have brought and lost, the court noted very clearly that the “delay” agreement timetable was within the branded drug’s patent term. If the patent lawsuit had dragged on through appeals instead of settled, the generic company’s market access would have likely been delayed well past the expiration of the branded patent.

On Monday, the Washington Post once again editorialized in support of efforts in Congress to “empower the FTC to challenge suspicious agreements in federal court.” This statement in the editorial is odd, considering FTC has already challenged numerous “suspicious” agreements in court. The bill endorsed by the Post would in fact create slam-dunk cases for FTC by erecting a presumption of illegality and an impossibly high burden of proof to rebut the presumption. 

On Tuesday, the other shoe dropped in the form of FTC’s FY 2011 Patent Settlement Report which, according to the Commission, reflects that pay-for-delay settlements continue unabated. The tone and approach of the study is so over-the-top that it inspired the normally even-keeled author of the Patent Baristas blog to entitle his post on the study, “FTC Study Finds That Pharmaceutical Industry Will Cause World To Explode.” Barista Stephen Jenei pulls no punches while noting that some of the FTC’s conclusions were based on “potential” pay-for-delay settlements, not actual ones, and that the Commission’s bald conclusion that all such settlements are anti-competitive “lacks a proper critical analysis.”

Kurt Karst’s post at the FDA Law Blog also raises some questions about the FTC’s data anaylsis.

Congress created FTC to be an independent enforcement agency to assess issues and cases and decide them based on the merits and the law. That mission is compromised when its staff and leadership shift into legislative advocacy mode and label agreements entered into through arm’s-length bargaining as inherently unlawful.

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