June 27, 2006

The Supreme Court has rejected the FTC's appeal to hear a case that could have ended the practice of reverse payments, spurring swift congressional action to outlaw such agreements.

Reverse payments, an arrangement in which brand companies pay generic competitors to delay launching their version of a drug, was at the heart of a March 2005 ruling by the U.S. Court of Appeals for the 11th Circuit that set aside an FTC order preventing Schering-Plough from paying two generic drugmakers not to make generic versions of its potassium deficiency drug K-Dur 20 (potassium chloride). The FTC asked the Supreme Court to hear the case, a request it recently renewed despite the fact that the Department of Justice (DOJ) had advised the court not to acquiesce to it.

In response to the Supreme Court's June 26 decision, Sens. Chuck Grassley (R-Iowa), Herb Kohn (D-Wis.), Patrick Leahy (D-Vt.) and Charles Schumer (D-N.Y.) announced within hours that they had introduced a bill to expressly prohibit brand manufacturers from paying generic firms to keep their products off the market.

"Sweetheart deals that delay the entry of low-cost drugs in the marketplace not only hurt consumers, they also threaten the sustainability of federal healthcare programs, such as Medicare and Medicaid. Our bill will ensure that the FTC has the ability to look out for the American public, not the profits of drug companies," Grassley said.

A spokesman for Schering-plough told FDAnews that the company was "pleased that the Supreme Court has declined to hear the case brought by the FTC and is glad this matter is finally closed. We believe this development further affirms the company's assertion that the patent litigation involving K-Dur was lawful and did not violate antitrust laws."

The court declined to hear the case despite the fact that the FTC had filed a convincing response to the Department of Justice's (DOJ) brief, according to one former FTC official. In its June 13 response, the FTC "argues persuasively that the court should not let the perfect be the enemy of the good," David Balto, an antitrust attorney with Robins, Kaplan, Miller and former policy director in the FTC's Bureau of Competition, said in an email. "With the current state of the law, this is probably the best settlement case the court is likely to get." (http://www.fdanews.com/did/5_125/)