Litigation Details for FEDERAL TRADE COMMISSION v. ENDO PHARMACEUTICALS INC. (E.D. Pa. 2016)

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FEDERAL TRADE COMMISSION v. ENDO PHARMACEUTICALS INC. (E.D. Pa. 2016)

Docket	⤷ Try for Free	Date Filed	2016-03-30
Court	District Court, E.D. Pennsylvania	Date Terminated	2016-11-08
Cause	15:0053 Federal Trade Commission Act	Assigned To	Paul Steven Diamond
Jury Demand	None	Referred To
Patents	7,276,250
Link to Docket	External link to docket

Small Molecule Drugs cited in FEDERAL TRADE COMMISSION v. ENDO PHARMACEUTICALS INC.

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Details for FEDERAL TRADE COMMISSION v. ENDO PHARMACEUTICALS INC. (E.D. Pa. 2016)

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Date Filed	Document No.	Description	Snippet	Link To Document

2016-03-30	119		Endo added three patents relating to an extended-release mechanism: Nos. 7,276,250; 5,662,933; and 5,… (Id. ¶¶ 45-46.) The ’250 patent expires in 2023; the ’933 and ’456 patents expired in 2013. (Id.) …generic Lidoderm did not infringe Patent No. 5,827,529, a Teikoku patent (licensed to Endo) covering certain…acquired patents—Nos. 5,741,510; 6,096,333; and 6,096,334—only one of which (the ’510 patent) was in … drugs, different markets, different patents, different patent litigations, different agreements, different	External link to document
>Date Filed	>Document No.	>Description	>Snippet	>Link To Document

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FTC v. Endo Pharmaceuticals: A Landmark Case in Pay-for-Delay Settlements

The Federal Trade Commission (FTC) has taken a bold stance against anticompetitive practices in the pharmaceutical industry with its lawsuit against Endo Pharmaceuticals Inc. and several other drug companies. This case, known as FEDERAL TRADE COMMISSION v. ENDO PHARMACEUTICALS INC. (2:16-cv-01440-PD), marks a significant milestone in the FTC's ongoing efforts to combat pay-for-delay settlements that hinder generic drug competition.

The Core of the Lawsuit

At the heart of this legal battle is the FTC's allegation that Endo Pharmaceuticals and its co-defendants violated antitrust laws by using pay-for-delay settlements to block consumers' access to lower-cost generic versions of two key drugs: Opana ER and Lidoderm[5].

The FTC filed a complaint in federal district court alleging that Endo Pharmaceuticals Inc. and several other drug companies violated antitrust laws by using pay-for-delay settlements to block consumers' access to lower-cost generic versions of Opana ER and Lidoderm with an agreement not to market an authorized generic – often called a "no-AG commitment" – as a form of reverse payment.[5]

Understanding Pay-for-Delay Settlements

Pay-for-delay settlements, also known as reverse payment settlements, occur when a brand-name drug manufacturer pays a generic competitor to delay entering the market with a lower-cost alternative. These agreements effectively extend the brand-name drug's monopoly, allowing for continued high prices at the expense of consumers.

The No-AG Commitment: A New Form of Payment

In this case, the FTC has introduced a novel argument by challenging the "no-AG commitment" as a form of reverse payment. This commitment involves the brand-name manufacturer agreeing not to release its own authorized generic version of the drug during the first generic's exclusivity period[6].

The Impact on Consumers

FTC Chairwoman Edith Ramirez highlighted the dual harm to consumers caused by these agreements:

"Settlements between drug firms that include 'no-AG commitments' harm consumers twice – first by delaying the entry of generic drugs and then by preventing additional generic competition in the market following generic entry," said FTC Chairwoman Edith Ramirez.[6]

The Drugs at the Center of the Controversy

Opana ER

Opana ER is an extended-release opioid used to relieve moderate to severe pain. It was a significant revenue generator for Endo, bringing in nearly $160 million in 2016 alone[1].

Lidoderm

Lidoderm is a topical patch used to relieve pain associated with post-herpetic neuralgia, a complication of shingles[5].

The Alleged Anticompetitive Agreements

Endo and Impax Laboratories

The FTC alleges that Endo paid Impax Laboratories, Inc. to eliminate the risk of competition for Opana ER. This agreement allegedly involved a payment of $40 million to keep a generic version of Opana ER off the market for over two years[10].

Endo and Watson Laboratories

Similarly, the FTC claims that Endo made a payment to Watson Laboratories, Inc. to delay the entry of a generic version of Lidoderm[6].

The Legal Basis of the FTC's Complaint

The FTC's complaint charges the defendants with violating Sections 1 and 2 of the Sherman Act, which constitutes unfair methods of competition in violation of Section 5 of the FTC Act[9].

Section 1 Violation

Endo, Impax, and Amneal are charged with entering into an illegal agreement in restraint of trade[9].

Section 2 Violation

Amneal is charged with monopolization of the oxymorphone ER market[9].

The FTC's Sought Relief

The FTC is seeking several forms of relief in this case:

A court judgment declaring that the defendants' conduct violates antitrust laws
An order for the companies to disgorge their ill-gotten gains
A permanent injunction barring the defendants from engaging in similar anticompetitive behavior in the future[5]

The Significance of the Case

This case represents a significant escalation in the FTC's efforts to combat pay-for-delay settlements. It's the first time the agency has challenged a no-AG commitment as a form of reverse payment[6].

Potential Industry-Wide Impact

If successful, this case could set a precedent that would significantly impact how pharmaceutical companies negotiate patent settlements, potentially leading to faster generic drug entry and lower prices for consumers.

The Defendants' Response

While the full details of the defendants' response are not provided in the available information, it's worth noting that such cases are often vigorously contested. Pharmaceutical companies typically argue that these settlements are within their rights under patent law and can actually expedite generic entry in some cases.

The Broader Context: FTC's Ongoing Battle Against Pay-for-Delay

This case is part of a larger, decade-long effort by the FTC to challenge pay-for-delay settlements. The agency has filed numerous lawsuits and conducted studies demonstrating the harmful effects of these agreements on consumers[6].

Previous FTC Actions

In 2013, the FTC achieved a significant victory when the Supreme Court ruled in FTC v. Actavis that pay-for-delay settlements can violate antitrust laws and should be subject to antitrust scrutiny.

The Pharmaceutical Industry's Perspective

The pharmaceutical industry often argues that these settlements are a legitimate way to resolve patent disputes and can sometimes result in generic drugs entering the market sooner than they would through protracted litigation.

The Potential Outcomes and Implications

The outcome of this case could have far-reaching implications for the pharmaceutical industry and consumers alike. A ruling in favor of the FTC could:

Discourage future pay-for-delay settlements
Accelerate generic drug entry into the market
Potentially lower drug prices for consumers
Force pharmaceutical companies to reconsider their patent settlement strategies

The Role of Congress and Potential Legislative Action

While the FTC pursues this case through the courts, there have also been efforts in Congress to address pay-for-delay settlements legislatively. Several bills have been introduced over the years aimed at banning or limiting these types of agreements.

Key Takeaways

The FTC has filed a landmark lawsuit against Endo Pharmaceuticals and others, challenging pay-for-delay settlements and no-AG commitments.
The case focuses on agreements related to two drugs: Opana ER and Lidoderm.
This is the first time the FTC has challenged a no-AG commitment as a form of reverse payment.
The outcome of this case could significantly impact how pharmaceutical companies negotiate patent settlements.
The FTC is seeking declaratory judgment, disgorgement of profits, and a permanent injunction against future anticompetitive behavior.

FAQs

Q: What is a pay-for-delay settlement? A: A pay-for-delay settlement, also known as a reverse payment settlement, occurs when a brand-name drug manufacturer pays a generic competitor to delay entering the market with a lower-cost alternative.
Q: What is a no-AG commitment? A: A no-AG commitment is an agreement by a brand-name drug manufacturer not to release its own authorized generic version of a drug during the first generic's exclusivity period.
Q: How do pay-for-delay settlements affect consumers? A: These settlements can harm consumers by delaying the entry of lower-cost generic drugs into the market, keeping drug prices artificially high.
Q: What is the FTC seeking in this lawsuit? A: The FTC is seeking a court judgment declaring the defendants' conduct illegal, disgorgement of profits, and a permanent injunction against future anticompetitive behavior.
Q: How could this case impact the pharmaceutical industry? A: If successful, this case could set a precedent that significantly changes how pharmaceutical companies negotiate patent settlements, potentially leading to faster generic drug entry and lower prices for consumers.

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