Fate of Reverse-Payment Agreements Could Be Decided in Court

The Supreme Court could decide this week whether to hear a case that would decide the legality of reverse-payment agreements, which an FTC legal expert recently called the single greatest threat to generic drug competition.

The FTC is engaged in a two-front assault against reverse-payment agreements: pushing the Supreme Court to hear a reverse-payment case and supporting legislation to ban reverse payments, Michael Kades, attorney adviser to FTC Commissioner Jon Leibowitz, said. He spoke at the Pharmaceutical Care Management Association’s Pharmacy Benefit Management & Generic Pharmaceutical Issues Symposium June 19.

Patrick Cafferty — an attorney for the plaintiffs who sued Barr Laboratories, saying its settlement with AstraZeneca in which it agreed not to market a generic version of tamoxifen was anti-competitive — said the Supreme Court is supposed to decide whether to hear the case June 25. The Department of Justice (DOJ) recommended last month that the court refuse to hear the case.

Because the FTC is not a party in the Barr case, it could not formally petition the Supreme Court to hear it, but last year it asked the court to review 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 drugmakers not to make generic versions of K-Dur 20 (potassium chloride).

The Supreme Court denied the FTC’s writ of certiorari last summer after the DOJ recommended against it. In response, a handful of senators introduced legislation that would ban the practice of reverse payments. The bill was reintroduced this year as S. 316 and H.R. 1432, the Preserve Access to Affordable Generics Act.

Whichever government branch ends up resolving the issue, the FTC wants reverse payments banned. “We are hopeful that the court will review and reverse Tamoxifen in a fashion that will discredit Schering,” FTC Commissioner J. Thomas Rosch said at an oversight hearing earlier this year. “Whether the Supreme Court or the Congress overturns Schering, we firmly believe that one or the other should do so.”