FTC Calls no-AG Commitment a Pay-For-Delay Agreement
The Federal Trade Commission (FTC) on Friday found that an agreement not to market an authorized generic—called a “no-AG commitment”—can be considered a form of reverse payment to delay the entry of generic competition.The original complaint filed by the FTC in 2016 concerned the company Endo Pharmaceuticals, which sought to block the market entry of generic versions of two of its products: an opioid known as Opana ER and a lidocaine patch called Lidoderm, which together made up about 64% of Endo’s total annual revenues.
In June 2010, FTC charged that Endo agreed to pay Impax more than $112 million to abandon its patent challenge and forgo entering the market with its lower-cost generic version of Opana ER for 2½ years, until January 2013.
But with that payment, Endo also agreed that it would not bring an authorized generic version of Opana ER to market, meaning Impax would be the only seller of generic Opana ER during its first 180 days on the market.
“The no-AG commitment was extremely valuable to Impax. With a no-AG commitment, the first filer’s revenue will approximately double on average compared to what the first filer would make if it faced authorized generic competition,” FTC said in its complaint. And in this case, Endo used this delay without competition to transition patients to a new formulation of Opana ER, thereby maintaining its monopoly power even after Impax’s generic entry, FTC explained.
After an Administrative Law Judge’s initial decision last May dismissed the charges against Impax, the FTC has now reversed that decision.
“The Commission explained that the U.S. Supreme Court’s Actavis decision held that eliminating the risk of competition through a reverse payment settlement itself constitutes an anticompetitive harm. The Commission found there was ample evidence of a risk that Impax could have launched a generic product before the agreed-upon date, had it not entered into the reverse payment settlement with Endo,” the FTC said.
The final order also bars Impax from entering into “any type of reverse payment that defers or restricts generic entry, including no-Authorized Generic commitments, as well as certain business transactions entered with the branded pharmaceutical manufacturer within 45 days of a patent settlement.”
FTC