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From Health Law Daily, March 22, 2013

District Court did not abuse its discretion in unsealing a financial analysis of Solvay’s AndroGel

By Susan L. Smith, JD, MA

The district court did not abuse its discretion to modify its protective order and unseal a financial analysis of Solvay Pharmaceuticals’ (now known as Abbvie Products LLC) (Solvay) drug, AndroGel (Federal Trade Commission v Abbvie Products LLC, March 21, 2013, Marcus, S). The Eleventh Circuit concluded that the financial analysis, which was attached to the Federal Trade Commission’s (FTC) complaint as the sole exhibit, was part of the judicial record. The district court had broad discretion to modify the protective order and properly found that the passage of time had altered the balance enough so that the value of public access to the financial analysis exceeded the confidentiality to Solvay. Therefore, the court affirmed the district court’s decision to make the financial analysis publicly accessible.

The settlement. The FTC began investigating a settlement between Solvay and several other pharmaceutical companies on its belief that the settlement violated antitrust laws because the companies had colluded to preserve the monopoly profits from Solvay’s highly lucrative patent on AndroGel, a topical testosterone gel. The settlement agreement featured a “reverse payment” in which Solvay paid the other pharmaceutical companies to delay marketing their generic version of AndroGel until 2015. Under the agreement, Solvay retained its monopoly until 2015 with reverse payments to potential competitors effectively giving them a share of the monopoly profits. During the course of the investigation, Solvay voluntarily disclosed a confidential document called the Project Tulip Financial Analysis (Tulip FA), which projected AndroGel’s profits and terms and benefits of a settlement between Solvay and its competitors.

FTC’s suit. The FTC filed an antitrust suit against Solvay and the other pharmaceutical companies based on the settlement and attached the Tulip FA as the sole exhibit to its complaint. Solvay requested and obtained from the district court judge a protective order sealing the Tulip FA indefinitely after Solvay showed good cause that the document contained sensitive financial information that could be harmful to Solvay’s business interests. The district court’s dismissal of the FTC’s suit was affirmed by the Eleventh Circuit relying on the rule that absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent (see FTC v. Watson Pharm. Inc., 677 F.3d 1298 (11th Cir.)). In 2012, the Supreme Court issued a writ of certiorari to review the Watson decision to determine whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent obtained by fraud or is instead presumptively anticompetitive and unlawful. The district court unsealed Tulip FA so that the FTC could discuss the document openly in the Supreme Court. The district court released Tulip FA based on its finding that the harms Solvay would suffer from Tulip FA’s being made public had been reduced in the intervening three years. Solvay appealed the court’s decision.

Solvay’s arguments. Solvay claims that several errors in the district court’s decision qualify as an abuse of discretion. First, Solvay claims that the district court erred as a matter of law by (1) treating the Tulip FA as a judicial record to which the strong presumption of public access applies; and (2) failing to apply the right standard to the motion because the court should have modified the order only if the FTC demonstrated extraordinary circumstances not merely good cause. In addition, Solvay claims that the district abused its discretion by failing to (1) consider Solvay’s reliance on the protective order, and (2) find that the balance of equities favors the protective order.

Court’s analysis. The court said a document’s status as a judicial record is not dependent upon whether it played a discernible role in the resolution of the case. The court determines whether a document is a judicial record depending on the type of filing it accompanied. Case law is consistent with treating the complaint as a judicial record and if a complaint is a judicial record, then it follows that attached exhibits also must be treated as judicial records. The FTC’s complaint is a judicial record, therefore, the Tulip FA, the sole exhibit appended to the FTC’s complaint, is a judicial record. The court found no abuse of discretion in the district court’s characterization of the Tulip FA as a judicial record. In addition, Solvay never argued for a heightened standard in the district court. The proper standard for district courts to apply is whether there was good cause to unseal the document. The district court placed the burden of demonstrating good cause for unsealing the document on the FTC and, therefore, did not commit an abuse of discretion. Furthermore, the district court weighed the interests and concluded that the public interest in making this record public outweighs the privacy interest of Solvay in its confidential information.

The case number is 12-16488.

Attorneys: Mark S. Hegedus, Federal Trade Commission. Jeffrey I. Weinberger (Munger Tolles & Olson, LLP) for Abbvie Products, LLC.

Companies: Abbvie Products, LLC

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