FTC Brushes Off Bristol's Attempt to Scrub Generic Competition

On March 7, the FTC announced its settlement of claims against Bristol Myers Squibb ("Bristol") for employing patent listings in the FDA's "Orange Book" to delay the entry of generic competitors for three of Bristol's brand name pharmaceutical products. The settlement is the latest in a series of initiatives by the agency aimed at preventing misuse of Hatch-Waxman Act proceedings to forestall competition in the pharmaceutical markets - and yet another sign that protecting generic entry and expansion is serious business to the FTC.

According to the FTC complaint, Bristol listed various patents in the FDA's "Orange Book" at times when it knew that generic drug manufacturers were preparing to enter the market and compete with two anti-cancer drugs, Taxol and Platinol, and the antianxiety drug BuSpar, all brand-name drugs manufactured and marketed by Bristol. As described in the May 2002 PGFM Antitrust Bulletin story relating to the FTC's amicus curiae brief filed in the private litigation against Bristol, the listing of a patent relating to a brand-name drug automatically delays the ability of a generic drug manufacturer to market a generic version of that drug for 30 months or until the resolution of a suit for infringement of the brand-name drug's patent. The FDA does not question the validity or appropriateness of the patents listed in the Orange Book.

In fact, the FDA has stated that they simply do not have the expertise to evaluate patents. The Federal Circuit has ruled that would-be generic entrants cannot obtain a declaratory judgement against brand-name pharmaceutical manufacturers for an improper Orange Book listing. Mylan Pharms. v. Thompson, 268 F.3d 1323, 1329-1333 (Fed. Cir. 2001). As a result, absent an action by the FTC or a court ruling that the patent at issue is not infringed upon or is invalid, very little legal recourse exists to prevent brand-name pharmaceutical manufacturers from using improper Orange Book listings to essentially stop the generic manufacturers from entering the market.

FTC staff has gained experience from a number of previous actions against pharmaceutical manufacturers that were alleged to have misused Hatch-Waxman Act proceedings to forestall generic entry or expansion into pharmaceutical markets. In three separate actions filed in 2000, the FTC alleged that brand-name pharmaceutical manufacturers employed patent infringement settlement payments allegedly paid in exchange for agreements on the part of would-be generic entrants to refrain from entering the market. See FTC v. Schering-Plough et. al, FTC Docket No. 9297; FTC v. Abbott Laboratories and Geneva Pharmaceuticals, Inc. FTC File No. 981 0395, and FTC v. Hoechst Marion Roussel, Inc., Carderm Capital L.P., and Andrx Corp., FTC Docket No. 9293. In 2002, the FTC settled claims against the Biovail Corporation relating to its "eleventh-hour" acquisition of patents relating to Tiazac, a brand-name hypertension treatment drug, and subsequent Orange Book listing. See In the Matter of Biovail Corporation, FTC File No. 011 0094. In the same year, the FTC settled claims against Biovail and Elan Corporation, alleging that the two manufacturers agreed to refrain from competing in offering different dosages of generic Adalat, a hypertension treatment drug. See In the Matter of Biovail Corporation and Elan Corporation, FTC File No. 011 0132.

Coupled with the FTC's amicus curiae brief filed in the private antitrust litigation relating to BuSpar and its issuance in July of 2002 of a study of generic drug entry, these actions provided a clear message that the FTC would remain vigilant in its public policy goal of insuring that the Hatch-Waxman Act actually furthers the goal of generic competition in pharmaceutical markets, as opposed to becoming a means for forestalling generic entry or expansion. In settling its own claims against Bristol this past month, the FTC again continues define its own regulatory role as a watchdog of the generic drug approval process.

For more information, please contact June Casalmir at [email protected] or Bernard Rhee at [email protected]. Mr. Rhee is a new addition to the Antitrust Practice Group. Please see the article "New Addition to the Practice Group".