FTC Attorney Rebuffs Challenge to FTC’s Reverse Payment Position


Should the Hatch-Waxman Act’s unique 180-day exclusivity feature change antitrust analysis in reverse payment cases?

Daniel Butrymowicz, staff attorney at the Federal Trade Commission’s health-care division, doesn’t think so.

Butrymowicz presented the FTC’s keynote speech, “Update on Reverse Payment Settlements and Other Antitrust Developments Concerning Brand Name and Generic Interests,” at the American Conference Institute’s 11th Annual Paragraph IV Disputes conference in New York April 25.

Pay-for-delay or reverse-payment settlements are patent litigation settlements that generally involve payments from branded drug companies to generic drug companies in exchange for delaying the generic from reaching the market.

Under the Hatch-Waxman Act, the first applicant to file an abbreviated new drug application (ANDA) challenging the patents on a brand-name product qualifies for the valuable 180 days of market exclusivity on the generic drug. During those six months, no other generics can come on the market other than those licensed by the brand-name company.

During the question and answer period after his speech, a conference attendee asked Butrymowicz why the 180-day exclusivity period, which is unique to pharmaceutical patent settlements, justifies reverse payments to the generic company.

“In this context, there are two monopolies,” the attendee said, the patent monopoly and the generic’s exclusivity. “There is a threat to launch [the generic product],” the attendee said. “That threat is important to make the pharmaceutical patent settlement different.”

FTC Attorney Wasn’t Swayed

But Butrymowicz wasn’t buying it.

“I don’t follow how 180-days of exclusivity would warrant a monetary payment from the brand,” he said. “The settlement doesn’t affect the generic’s right to exclusivity,” he said, “It just affects when it happens.”

Butrymowicz was presenting his own views and not the FTC’s official position when he spoke.

The FTC has actively litigated several reverse payment matters including the case against Actavis, which the Supreme Court decided in 2013. In the Actavis case, the high court held that drug patent litigation settlements that include large and unjustified payments, are subject to antitrust scrutiny under a rule of reason analysis. The details of that analysis, however, were left to district courts to define.

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