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From Antitrust Law Daily, February 28, 2019

Final defendant settles FTC charges in AndroGel reverse payment suit

By Jody Coultas, J.D.

The FTC has settled with the remaining defendant in a long-running suit challenging allegedly anticompetitive reverse payments in the generic drug market.

Solvay Pharmaceuticals, which is now owned by AbbVie Inc., has agreed to settle charges that it entered into an illegal agreement with three generic drug companies to restrict generic competition to Solvay’s branded testosterone-replacement drug AndroGel for nine years, the FTC has announced. The settlement prohibits AbbVie from entering into certain patent infringement settlement agreements that restrict generic entry for certain drugs and contain common forms of reverse payments (FTC v. Actavis, Inc., FTC File No. 071 0060, Civil Action No. 1:09-cv-955-TWT).

In 2009, the FTC challenged an agreement in which Solvay paid three generic drug manufacturers to delay the release of generic equivalents to AndroGel, typically used in the treatment of men with low testosterone levels due to advanced age, certain cancers, and HIV/AIDS until 2015.

The federal district court in Atlanta dismissed the complaint, and the Eleventh Circuit affirmed. In 2013, the Supreme Court reversed the 11th Circuit, holding that reverse payment settlement agreements are not entitled to "near-automatic antitrust immunity" simply because the anticompetitive effects fall within the scope of the exclusionary potential of the patent. Although "pay-for-delay" settlements are not presumptively unlawful, the FTC should be permitted to challenge reverse-payment agreements between Solvay and would-be generic competitors Watson Pharmaceuticals (now Actavis, Inc.) and Paddock Pharmaceuticals under a rule of reason analysis. The case was remanded to the district court, and trial was scheduled to begin on March 4, 2019.

The settlement announced today prohibits Solvay’s current owner AbbVie from entering into agreements that restrict generic entry for certain drugs and contain common forms of reverse payments, such as: (1) a side deal, in which the generic company receives compensation in the form of a business transaction entered at the same time as the patent litigation settlement; or (2) a no-AG commitment, in which a brand company agrees not to compete with an authorized generic version of a drug for a period of time. The settlement exempts licenses to enter the market on a later date, compensation for saved future litigation costs up to $7 million, a continuation or renewal of a pre-existing agreement, and several other types of agreements that are unlikely to be anticompetitive. If approved, the order will remain in effect for 10 years.

The settlement covers those products that Solvay may have been marketing or developing before its purchase in 2010 by Abbott Laboratories, which later spun off its worldwide pharmaceutical business into AbbVie Inc.

Companies: Solvay Pharmaceuticals; Abbvie Inc.; Watson Pharmaceuticals; Actavis, Inc.; Paddock Pharmaceuticals

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