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Drug Manufacturers

Federal Trade Commission v. Watson Pharmaceuticals, 133 S.Ct. 2223 (2013)

Also under Antitrust

Outcome:    Very favorable

Issue

The issue in this case was whether payments from holders of patents on branded drugs, made to generic drug manufacturers to induce the generic manufacturers to delay production of the generic drugs, violate the antitrust laws.

AMA interest

The AMA opposes “pay for delay” arrangements, which have the effect of making generic drugs unavailable to patients.

Case summary

Solvay Pharmaceuticals patented a drug, AndroGel, used to treat low testosterone.  Two generic drug manufacturers, one of which was Watson Pharmaceuticals, began producing a generic version of AndroGel before expiration of the patent.  As a result, Solvay sued Watson and the other generic manufacturer for patent infringement.  One of the defenses against the infringement claim was that the AndroGel patent was invalid.

In order to settle the litigation, Solvay paid the generic drug manufacturers to delay their production until after the expiration of the patent.  In exchange, the generic manufacturers agreed they would not challenge the validity of the AndroGel patent.

The Federal Trade Commission then sued Solvay and both generic manufacturers, contending that the AndroGel patent was invalid and that the “pay for delay” arrangement was a violation of the antitrust laws.  The Eleventh Circuit, however, held that such agreements are valid unless they are a sham to perpetuate a patent that has no reasonable claim to validity.  Here, the FTC had alleged that the patent was invalid, but it had not alleged that there was no reasonable claim of validity.

The case was appealed to the Supreme Court, which, by a split decision, reversed on June 17, 2013.  The Court held that the FTC should have the right to prove the reverse payment agreement anticompetitive under a "rule of reason" basis.

AMA involvement

The AMA joined an amicus brief of the American Association of Retired Persons, arguing that the Eleventh Circuit should be reversed, the FTC should be allowed to prove the AndroGel patent invalid, and pay for delay agreements should be deemed presumptively in violation of the antitrust laws.

United States Supreme Court brief

Pliva v. Mensing, 131 S. Ct. 2567 (2011)

Outcome:   Very unfavorable

Issue

The issue in this case was whether generic drug manufacturers could be liable for state tort claims based on inadequate labeling that failed to warn of the possible side effects associated with the drugs.

AMA interest

Physicians and patients should be aware of medication side affects.

Case summary

Gladys Mensing’s physician prescribed medication to treat her diabetic gastroparesis.  Her pharmacist filled the prescription with a generic drug, metoclopramide.  After four years of taking the metoclopramide, Mensing developed a neurological disorder, tardive dyskinesia.

Mensing sued the metoclopramide manufacturer in the United States District Court.  She contended that the label on her medication gave inadequate notice of the risk of developing tardive dyskinesia, despite mounting evidence within the pharmaceutical industry of such risk, and the manufacturer had therefore violated a state law of product liability.

The district court entered judgment for the generic drug manufacturer.  It found that Mensing’s failure to warn claims created an impermissible conflict with federal law, as the Hatch-Waxman Amendments of the Food, Drug, and Cosmetic Act (FDCA) mandated different and inconsistent labeling requirements from those of state law.  The state law was therefore preempted.  Mensing appealed to the Eighth Circuit, which reversed.

The generic drug manufacturer appealed to the United States Supreme Court.  It contended that the Hatch-Waxman amendments impliedly preempt state lawsuits based on such claims.  It further asserted that it would be economically impractical to sell generic drugs without such preemption.  The case was consolidated with Demahy v. Actavis, a Fifth Circuit decision based on similar facts.

The Supreme Court found it was impossible for the generic drug manufacturers to comply simultaneously with their legal obligations under state and federal law.  Thus, the state law was preempted, and the suits were remanded for dismissal.


Litigation Center involvement

The Litigation Center, along with several state medical associations and insurance companies that represent physicians, filed an amicus curiae brief urging non-preemption of state law.

United States Supreme Court brief.