FTC Issues FY 2007 Pharmaceutical Company Settlement Agreements Summary; Agreements Involving Authorized Generics on the Rise
Title XI (§ 1112) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) requires pharmaceutical applicants (both brand and generic) to file with the Federal Trade Commission (“FTC”) and the Assistant Attorney General certain agreements executed on or after January 7, 2004. (Information on the types of agreements that must be filed is provided in the FTC’s “Pharmaceutical Agreement Filing Requirements”.) Since the enactment of the MMA, the FTC has published summaries of these agreements. Copies of previous summaries are available here (FY 2004), here (FY 2005), and here (FY 2006).
On May 21, 2008, the FTC announced the availability of the Commission’s FY 2007 summary. According to the summary, the FTC received 45 agreements in FY 2007 (the same number as in FY 2006), with the following breakdown in agreement types:
- Thirty-three of the agreements were final settlements of patent litigation brought by a brand company against a generic company.
- Nine were interim agreements that occurred during patent litigation between a brand and a generic company, but did not resolve the litigation.
- One was an agreement between a first-filer generic company and a subsequent generic filer.
As in FY 2006, a significant number of final settlement agreements filed in FY 2007 reportedly included both compensation to the generic company and a restriction on generic marketing (79% of these agreements involved “first filer” generics eligible for 180-day exclusivity). However, according to the FTC, unlike the agreements reported on in the Commission’s FY 2006 summary, the agreements filed in FY 2007 concerning restrictions on generic entry “generally did not include some type of side-deal involving elements not directly related to the resolution of the patent dispute between the brand and the generic. Rather, in most of these agreements the compensation to the generic takes the form of the brand’s agreement not to sponsor or compete with an authorized generic for some period of time.”
FTC Chairman William E. Kovacic commented that “[t]his report confirms that settlements with potentially anticompetitive arrangements continue to be prevalent. The Commission remains committed to ensuring that brand and generic companies do not use such settlements as a way to deny consumers the benefits of competition.”
In March 2006, the FTC proposed a study of the competitive effects of authorized generics. In April 2007, the FTC announced that it was seeking public comment on its proposed information requests to firms in the prescription drug industry. In December 2007, the FTC announced the issuance of those information requests. The FTC has not publicly discussed a timeframe for issuing a study report.
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