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October 8, 2014 12:30 pm – 2:00 pm Eastern 11:30 am – 1:00 pm Central 10:30 am – 12:00 pm Mountain 9:30 am – 11:00 am Pacific Reverse ANDA Settlements.

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Presentation on theme: "October 8, 2014 12:30 pm – 2:00 pm Eastern 11:30 am – 1:00 pm Central 10:30 am – 12:00 pm Mountain 9:30 am – 11:00 am Pacific Reverse ANDA Settlements."— Presentation transcript:

1 October 8, 2014 12:30 pm – 2:00 pm Eastern 11:30 am – 1:00 pm Central 10:30 am – 12:00 pm Mountain 9:30 am – 11:00 am Pacific Reverse ANDA Settlements in the Wake of FTC v. Actavis 1

2 How to submit a question 2

3 Online Programs Committee Webinar Coordinators AIPLA Online Programs Committee Leadership 3 Stephen E. Belisle Chair, Online Programs Fitzpatrick Cella Harper & Scinto Jennifer M. K. Rogers Webinar Coordinator Vice Chair, Online Programs Shumaker & Sieffert, PA Tim Howe Sanofi Pasteur Paul Ragusa Baker Botts, LLP

4 Presented by 4 Patty McDermott United States Federal Trade Commission Jennifer Tempesta Baker Botts LLP Paul Simboli (Moderator) Depomed, Inc.

5 Jennifer Tempesta Special Counsel Baker Botts LLP October 8, 2014 Reverse ANDA Settlements in the Wake of FTC v. Actavis 5

6 Overview Introduction Hatch-Waxman Act FTC v. Actavis, 133 S.Ct. 2223 (2013) Case law since Actavis Pending legislation 6

7 Hatch-Waxman Act Attempts to balance public interest Abbreviated New Drug Application (“ANDA”) Paragraph IV certification Often lead to litigation 7

8 Reverse Payments Payment from brand manufacturer to generic in exchange for agreement by generic to delay its entry into the market 8

9 Prior to Actavis Circuit split regarding reverse-payment settlements and antitrust laws Acceptable effect of settlement is within scope of patent Presumptively unlawful 9

10 FTC v. Actavis Question: can reverse payment settlement constitute a violation of antitrust laws? Answer: Yes, but each case considered individually Rule-of-reason standard Lower courts to structure rule-of-reason 10

11 Case Law Since Actavis Cited many times already Several instances where courts considered motions related to what constitutes a reverse payment Disagreement At least 4 district court decisions have found that Actavis does not require a monetary payment in order to find a "reverse payment" At least 2 district courts have taken the contrary view, requiring a monetary payment in order for cases to survive a motion to dismiss 11

12 In re Lipitor Antitrust Litigation Plaintiffs alleged reverse-payment settlement Brand to forgive outstanding money judgments Generic to gain rights to market generic product in certain international markets 12

13 In re Lipitor Antitrust Litigation Plaintiff allowed to amend complaint Defendant argued no money; no violation Court rejected defendant’s argument Noted Actavis does not require monetary payments 13

14 In re Nexium Antitrust Litigation Plaintiffs alleged reverse-payment settlement Brand to provide monetary payments or liability forgiveness Generic to delay entry 14

15 In re Nexium Antitrust Litigation Pleadings enough to avoid dismissal Three-part rule-of-reason Exercise of power in a relevant economic market Anti-competitive consequences Detriments outweighed efficiencies 15

16 In re Nexium Antitrust Litigation Noted Actavis does not require monetary transaction Court granted several motions to dismiss Plaintiff failed to demonstrate “large unjustified reverse payments” required by Actavis Detailed opinion is forthcoming 16

17 In re Lamictal Direct Purchaser Antitrust Litigation Plaintiff alleged reverse-payment settlement Brand agreed not to launch an authorized generic during generic’s first-filer exclusivity period 17

18 Three-part test from Actavis Reverse payment Reverse payment is large and unjustified Rule-of-reason In re Lamictal Direct Purchaser Antitrust Litigation 18

19 Five-part rule-of-reason test Adverse effect Payment is justified Market power Size of settlement Possible to settle without reverse payment In re Lamictal Direct Purchaser Antitrust Litigation 19

20 Court found that Actavis requires money No money; no reverse payment Motion to dismiss granted In re Lamictal Direct Purchaser Antitrust Litigation 20

21 "Because in this Court's view, Actavis requires cash consideration in order to trigger rule of reason scrutiny, and because the Plaintiffs have not adequately alleged payment in the form of cash... the Plaintiffs have failed to state a claim upon which relief may be granted under the current state of the law." In re Loestrin 24 Fe Antitrust Litig., MDL 13-2472-S-PAS, 2014 WL 4368924 (D.R.I. Sept. 4, 2014) In re Loestrin 24 Antitrust Litigation 21

22 "There is currently a rift within the federal judiciary over whether Actavis applies to reverse payment agreements under which the compensation provided by the patent-holder takes a form other than direct cash settlements.... Having carefully considered the competing analyses.... In my opinion, reverse payments deemed anti-competitive pursuant to Actavis may take forms other than cash payments." Time Ins. Co. v. AstraZeneca (Nexium) 22

23 The court looked to recent decisions and tried to strike a balance, holding that a "non-monetary payment must be converted to a reliable estimate of its monetary value so that it may be analyzed under the Actavis factors." slip op. at 35. Found alleged reverse payment involving non-monetary payment must be valued in terms of a monetary amount in order to determine whether it is "large" within the meaning of Actavis. Id. at 37. Granted motion to dismiss because plaintiffs did not provide evidence for court to determine value of payment. In re Effexor Antitrust Litigation 23

24 Pending Legislation S. 214, 113 Cong. (2013) – “A bill to prohibit brand name drug companies from compensating generic drug companies to delay the entry of generic drug into the market” 24

25 Pending Legislation S. 504, 113 Cong. (2013) – “The Fair and Immediate Release of Generic Drugs Act” 25

26 Patricia M. McDermott Attorney, U.S. Federal Trade Commission Bureau of Competition, Health Care Division October 8, 2014 Reverse Payment Settlements In The Wake of Actavis 26 This presentation was prepared from public sources. The views expressed herein do not necessarily reflect those of the Federal Trade Commission.

27 Basic Reverse Payment Settlement Generic files ANDA with P(IV) certification Brand sues generic for infringement Brand and generic settle Generic agrees to refrain from entering market until a certain date Brand provides some form of compensation to the generic that the generic could not have obtained even if it had prevailed in litigation 27

28 Why Do Reverse Payments Raise Antitrust Concerns? Generic refrains from entering in exchange for share of brand’s monopoly profits Agreement between two competitors not to compete – Sherman Act § 1 Maintenance of monopoly through improper means – Sherman Act § 2 Brand and generic can make more by not competing – at the expense of consumers 28

29 Generic Competition Pay for Delay Incentives To Pay For Delay Generic’s profits Consumer savings Brand’s profits Generic’s cut of monopoly profits Pre-Generic Entry Brand’s monopoly profits 29

30 The Supreme Court’s Actavis Decision Involvement of patent does not preclude antitrust scrutiny Supreme Court rejects the “scope-of-the-patent” test “[T]his Court’s precedents make clear that patent-related settlement agreements can sometimes violate the antitrust laws.” True regardless of whether the patent is valid or infringed The scope-of-the patent test is contrary to: The “general procompetitive thrust of the” Hatch-Waxman Act Hatch-Waxman’s “specific provisions facilitating challenges to a patent’s validity” and Hatch-Waxman’s more recent provisions requiring parties to a P(IV) settlement to report the settlement terms to the F TC 30

31 Supreme Court’s Guidance For Rule Of Reason Review The focus of the antitrust inquiry is on the payment, not the patent Size (and relationship) matters Key question: Did the payment induce the generic to stay out of the market? Elimination of the risk of competition constitutes the relevant anticompetitive harm 31

32 Issues Likely To Be Contested Post-Actavis 1. What is a “payment”? 2. What is a “large” payment? 3. Who has the burden of proof to show an “unexplained” or “unjustified” payment & what proof is required? 4. What can be counted as “saved litigation costs”? 5. What “other justifications” are permitted? 6. What about market or monopoly power? 7. What is the role of the patent? 32

33 What’s At Stake For Consumers? If reverse payments are permitted, consumers and payers lose the benefits of generic entry prior to patent expiration arising from: 1.Generic victories in patent litigation 2.Settlements without reverse payments 3.“At risk” entry by generics 33

34 Impact Of Reverse Payment Settlements 2010 FTC Staff Study: Agreements with compensation to generic companies restrict entry an average of 17 months longer than agreements without Reverse payment settlements cost U.S. consumers $3.5 billion per year 34

35 Overview of Final Settlements (2004-2012) 35 Fiscal Year200420052006200720082009201020112012 Final Settlements141128336668113156140 Potential Reverse Payment0314 1619312840 0%27%50%42%24%28%27%18%28% Potential Reverse Payment Involving First Filers 029111315261823 Parties Can Settle Without Reverse Payments

36 Ending Pay-For-Delay Is A Top FTC Priority “Ending anticompetitive ‘pay-for-delay’ settlements in the pharmaceutical industry” remains “one of the Commission’s top priorities” Prepared Statement of the Fed. Trade Comm’n Before the U.S. Senate Comm. On the Judiciary (July 23, 2013) at 1 36

37 The FTC’s Current Reverse Payment Cases FTC v. Cephalon (Provigil) Summary judgment fully briefed and pending in E.D. Pa. Court held collateral estoppel precludes Cephalon from relitigating patent validity FTC v. Actavis (AndroGel) On remand to N.D. Ga. from Supreme Court Renewed motion to dismiss based on Noerr-Pennington recently denied FTC v. AbbVie (AndroGel) Newest case filed by FTC on Sept. 8, 2014 in E.D. Pa. Alleges both sham litigation and illegal reverse payment 37

38 What’s Next For The FTC? Pursue pay-for-delay matters currently in litigation FTC v. AbbVie (E.D. Pa.); FTC v. Actavis (N.D. Ga.); FTC v. Cephalon (E.D. Pa.) Monitor private litigations and file amicus briefs as appropriate Effexor XR (D. N.J.), Wellbutrin (E.D. Pa.) & Lamictal (3d Cir.) Investigate new pay-for-delay matters Re-examine settlements filed under the Medicare Modernization Act (MMA) of 2003 38

39 19 Cases To Watch The cases (by brand product name) Actos, Adderall, Aggrenox, AndroGel, AndroGel Sham, Cipro, Effexor, K-Dur, Lamictal, Lidoderm, Lipitor, Loestrin, Nexium, Niaspan, Opana, Provigil, Skelaxin, Solodyn, Wellbutrin The brand companies Abbott, AbbVie, AstraZeneca, Bayer, Besins, Biovail, Boehringer, Cephalon, Endo, GlaxoSmithKline, King, Medicis, Pfizer, Shire, Schering, Takeda, Warner Chilcott, Wyeth The generic companies Actavis, Barr, Duramed, Dr. Reddy’s, HMR, Impax, Lupin, Mutual, Mylan, Par, Perrigo, Ranbaxy, Rugby, Sandoz, Teva, Upsher Smith 39

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41 Thank you for participating in today’s program! If you have any questions for today’s presenters that were not addressed or were stuck in the queue, please email them to: CLE processing requires the completion of our online survey using the following link : You can also find the evaluation on our website at: > Learning Center/Meetings > Surveys www.aipla.orgSurveys 41

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