The practice of "reverse payments" between brand and generic drugmakers could become much more commonplace if the FTC is unsuccessful in its last-ditch effort to abolish the patent settlement strategy.
The FTC late last month played the final card in its long-running campaign against reverse payments, petitioning the U.S. Supreme Court to review the practice. The FTC wants the nation's highest court to review a decision by the U.S. Court of Appeals for the 11th Circuit, which in March overruled an FTC mandate that attempted to prevent drug patent holders from paying generic manufacturers to keep less-expensive versions of branded products off the market, a practice known in the drug industry as reverse payments.
The case emanated from a dispute between the FTC and brand firm Schering-Plough, which the agency accused of violating antitrust laws by signing two reverse payment agreements in the late 1990s. According to the FTC, Schering-Plough paid two generic drugmakers up to $75 million in cash in exchange for the firms delaying their launch of generic versions of K-Dur (Potassium Chloride), a Schering-Plough drug intended for patients who are at risk of a potassium deficiency in the blood.
"Settlements of this kind raise serious antitrust concerns if the payments from the patentee are in fact payoffs to potential generic competitors to induce them to abandon patent challenges and delay their entry," the FTC states in its recent petition to the Supreme Court.
The 11th Circuit rejected the FTC's claims in its March decision, ruling that the abolishment of reverse payments would weaken the ability of drug companies to defend their patents and could also prevent patent holders from reaching out-of-court settlements with generic firms.
If the Supreme Court refuses to hear the case or reaches a decision similar to the 11th Circuit's, reverse payments will undoubtedly become a more common strategy among brand firms.