FTC, California Sue Drug Makers for Delaying Generic Competition

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The FTC and the California Attorney General filed a complaint in the federal district court in Los Angeles, challenging agreements in which Solvay Pharmaceuticals, Inc. paid generic drug makers Watson Pharmaceutical Companies, Inc. and Par Pharmaceutical Companies, Inc. to delay generic competition to Solvay’s branded testosterone-replacement drug AndroGel.

According to the complaint, Watson and Par, via its partner Paddock Laboratories, each had sought regulatory approval from the Food and Drug Administration (FDA) to market generic versions of AndroGel.

In their FDA filings, both companies certified that their products did not infringe the only patent Solvay had relating to AndroGel, and that the patent was invalid.

The complaint charged that Solvay agreed to pay the generic companies to abandon their patent challenges and agree not to bring a generic AndroGel product to market for nine years, until 2015. The defendants allegedly cooperated on the sale of AndroGel and shared the monopoly profits, rather than competing, according to the FTC.

It is alleged that the agreements violate the Sherman Act, the FTC Act, the California Cartwright Act, and the California Unfair Competition Act. The complaint seeks an order permanently enjoining the defendants from engaging in similar conduct in the future.

In addition, the complaint seeks an order requiring that the defendants pay $2,500 for each violation of the California Unfair Competition Act and to pay the state’s attorney fees and costs.

The action is FTC v. Watson Pharmaceuticals, Inc., CCH Trade Regulation Reporter ¶16,258. A news release and civil complaint appear at the FTC website.

Watson Response

Watson issued a statement in response to the action. “We are disappointed that that FTC has decided to challenge our patent settlement, as we believe the agreement fully complies with both the spirit and the letter of antitrust and consumer protection laws, as interpreted by numerous appellate courts throughout the U.S.,” said Paul Bisaro, Watson’s President and Chief Executive Officer.

“Importantly, our settlement promotes competition and confers a meaningful benefit to consumers by providing for, among other things, the entry of a genetic version of AndroGel five years prior to the expiration of the AndroGel patents. We intend to vigorously defend ourselves in this matter.”