FDAnews Drug Daily Bulletin

DOJ RECOMMENDS SUPREME COURT NOT REVIEW REVERSE PAYMENTS

May 22, 2006
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The Solicitor General of the United States has advised the Supreme Court not to review the FTC's antitrust case against Schering-Plough -- a development that could defeat the agency's effort to kill the practice of "reverse payments," where drugmakers pay generic competitors to delay launching their version of the innovator's product.

If the court decides not to hear the case, Congress would have to pass legislation to end the practice. The court asked the Department of Justice to comment on the case last year after the FTC petitioned the court to review an appellate court decision that overturned an FTC mandate banning the tactic.

The case "does not present an appropriate opportunity for this court to determine the proper standards for distinguishing legitimate patent settlements," the Solicitor General said in its brief filed May 17.

In March 2005, the U.S. Court of Appeals for the 11th Circuit set aside an FTC order that would not allow drugmaker Schering-Plough to settle a patent dispute by agreeing to pay two generic drugmakers to delay their launch of generic versions of Schering-Plough's potassium deficiency drug K-Dur 20 (potassium chloride). The court ruled 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.

In its petition for certiorari, the FTC presented two questions to the Supreme Court: whether antitrust law prohibits agreements that include reverse payments, and whether the appeals court incorrectly applied the "substantial evidence" standard when it overturned the FTC's mandate.

The brief said the Supreme Court should not hear the case because the appellate court "did not squarely address the theory of antitrust liability" presented in the FTC's petition to the Supreme Court. There is also no 'circuit split' -- where different circuit courts have disparate views on the same subject -- justifying the Supreme Court's review of the case so as to provide "national uniformity" of a standard determining validity of reverse payments, the brief states. (http://www.fdanews.com/did/5_99/)