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FTC Charges Against Generic Company in Pay-for-Delay Case Dismissed

Posted 29 May 2018 | By Zachary Brennan 

FTC Charges Against Generic Company in Pay-for-Delay Case Dismissed

Chief Administrative Law Judge D. Michael Chappell last week dismissed antitrust charges from the Federal Trade Commission (FTC) against generic drugmaker Impax Laboratories, arguing that earlier entry to market for the generic “was unlikely,” even though Impax was paid $112 million by the brand name drugmaker Endo Pharmaceuticals.

The FTC had filed an administrative complaint against Impax, charging that in 2010, Impax and Endo Pharmaceuticals illegally agreed that Impax would not compete over Endo’s Opana ER (oxymorphone) until January 2013. In exchange, Endo paid Impax more than $112 million.

Chappell found it unlikely that Impax would have launched a generic version of Endo’s Opana ER before January 2013 as such an “at risk” launch would have been economically disadvantageous because Impax is a small pharmaceutical company with revenues of less than $1 billion, and it could not bet the company on any one product.
“[T]he real world procompetitive benefits of the Endo-Impax Settlement are substantial,” Chappell wrote.
Michael Carrier, distinguished professor at Rutgers Law School, explained to Focus, “This is a thorough opinion that delves far into the weeds on issues like whether the payment for the Parkinson’s deal was justified and whether Impax was likely to launch at risk. The court appropriately found that the no-AG [authorized generic] payment was unjustified.”
Carrier also explained that the FTC v. Actavis Supreme Court decision “anticipated only two justifications: that the payment is no greater than litigation costs or that it was for services. It did not allow a payment to be justified based on the ‘scope of the patent’ test it had rejected. This decision resuscitates just that test by pointing to the ‘benefits’ from the generic entering before the end of the patent term.”
He noted that the facts of the Impax case could support there not being much time before the end of the patent term by the time the Federal Circuit issued its decision, but “even an 8-month period (from Jan. to Sept. 2013) could be enough for multiple generics to enter the market. And that could benefit consumers more (and in a way the Supreme Court recognized) than the benefit from Impax’s generic entry.”
Chappell’s opinion is subject to review by the full FTC on its own motion, or at the request of any party, and Complaint Counsel have filed a Notice of Appeal.


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