George Fomum-Mugri
MGMT 201
10/25/2016
Intellectual Property – Federal Trade Commission v. Actavis (2013)
Summary:
The case deals with an antitrust dispute of a progressively increasing practice within the pharmaceutical industry. Brand-name drug manufacturers, such as Solvay Pharmaceuticals and GlaxoSmithKline, challenged with the competition of generic drug manufacturers essentially bribe prospective competitors with cash payments incentivizing them to abstain from the market. These payments are attempts at resolving disputes over the legitimacy and/or infractions of the patents held by these brand-name drug manufacturers. Since competition from generic drug manufacturers moderates the prices of drugs, these “pay for delaying” or “reverse …show more content…
In the year 2003, the Brussels based pharmaceutical company, Solvay Pharmaceuticals received a patent for Androgel, its brand-name drug, which is utilized as a remedy for low levels of testosterone in men. Actavis, another large pharmaceutical, subsequently applied for patents for generic drugs that were developed with Androgel as the model. Solvay Pharmaceuticals proceeded to sue Actavis claiming the company violated “Paragraph IV” of the Hatch-Waxman Act which states that if approved, a drug product has “exclusive, or monopoly, status in the market for a certain number of years (five years for a new chemical entity and other periods of time for different situations). Under this law, the FDA is unable to legally approve a generic drug application until the end of the exclusivity period or for a 30-month period while the courts attempt to settle the dispute. After three years of litigation between Solvay Pharmaceuticals and Actavis, the FDA approved the patent for the generic drug. Instead of putting the generic drug on the market, Actavis entered in a reverse-payment arrangement with Solvay Pharmaceuticals. Under the terms of this agreement, Actavis would withhold the generic drug from the market for an undisclosed specific number of years while also promoting the brand-name drug to doctors. “The Federal Trade Commission has general jurisdiction over …show more content…
Singer Manufacturing Company and United States v. New Wrinkle, Inc., Justice Stephen Bryer delivered the opinion of the Supreme Court to reverse the rulings of the lower courts. The ruling was supported by Justice Ginsburg, Justice Kennedy, Justice Sotomayor, and Justice Kagan while Justice Roberts, Justice Scalia, and Justice Thomas dissented. Justice Samuel Alito opted to take no part in the consideration or decision of the case. The approving Justices concluded that “patent and antitrust policies are both relevant in determining the ‘scope of the patent monopoly’- and consequently antitrust law immunity- that is conferred by a patent.” However, the Justices claimed that reverse-payments were distinctive in the sense that the party “with no claims on damages” is paying the other party which diverges from how settlements typically proceed. They also claimed that reverse-payments, although ruled against in this ruling, were not necessarily illegal. The dissenting Justices argued that only when the holder of a patent acts beyond the capacity of its permitted monopoly does enquiry under antitrust law become appropriate. They claimed that the reverse-payments was a “novel approach “and had no “support in
MGMT 201
10/25/2016
Intellectual Property – Federal Trade Commission v. Actavis (2013)
Summary:
The case deals with an antitrust dispute of a progressively increasing practice within the pharmaceutical industry. Brand-name drug manufacturers, such as Solvay Pharmaceuticals and GlaxoSmithKline, challenged with the competition of generic drug manufacturers essentially bribe prospective competitors with cash payments incentivizing them to abstain from the market. These payments are attempts at resolving disputes over the legitimacy and/or infractions of the patents held by these brand-name drug manufacturers. Since competition from generic drug manufacturers moderates the prices of drugs, these “pay for delaying” or “reverse …show more content…
In the year 2003, the Brussels based pharmaceutical company, Solvay Pharmaceuticals received a patent for Androgel, its brand-name drug, which is utilized as a remedy for low levels of testosterone in men. Actavis, another large pharmaceutical, subsequently applied for patents for generic drugs that were developed with Androgel as the model. Solvay Pharmaceuticals proceeded to sue Actavis claiming the company violated “Paragraph IV” of the Hatch-Waxman Act which states that if approved, a drug product has “exclusive, or monopoly, status in the market for a certain number of years (five years for a new chemical entity and other periods of time for different situations). Under this law, the FDA is unable to legally approve a generic drug application until the end of the exclusivity period or for a 30-month period while the courts attempt to settle the dispute. After three years of litigation between Solvay Pharmaceuticals and Actavis, the FDA approved the patent for the generic drug. Instead of putting the generic drug on the market, Actavis entered in a reverse-payment arrangement with Solvay Pharmaceuticals. Under the terms of this agreement, Actavis would withhold the generic drug from the market for an undisclosed specific number of years while also promoting the brand-name drug to doctors. “The Federal Trade Commission has general jurisdiction over …show more content…
Singer Manufacturing Company and United States v. New Wrinkle, Inc., Justice Stephen Bryer delivered the opinion of the Supreme Court to reverse the rulings of the lower courts. The ruling was supported by Justice Ginsburg, Justice Kennedy, Justice Sotomayor, and Justice Kagan while Justice Roberts, Justice Scalia, and Justice Thomas dissented. Justice Samuel Alito opted to take no part in the consideration or decision of the case. The approving Justices concluded that “patent and antitrust policies are both relevant in determining the ‘scope of the patent monopoly’- and consequently antitrust law immunity- that is conferred by a patent.” However, the Justices claimed that reverse-payments were distinctive in the sense that the party “with no claims on damages” is paying the other party which diverges from how settlements typically proceed. They also claimed that reverse-payments, although ruled against in this ruling, were not necessarily illegal. The dissenting Justices argued that only when the holder of a patent acts beyond the capacity of its permitted monopoly does enquiry under antitrust law become appropriate. They claimed that the reverse-payments was a “novel approach “and had no “support in