pharmaceutical-pills-in-boxThere has been increasing litigation, particularly within the last decade amongst consumers, the FTC, branded drug manufacturers, and generic drug manufacturers, since the 1984 enactment of Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act. This controversy presents a unique dilemma to consumers, who would like to think that the manufacturers of generic drugs, would logically and naturally litigate matters in a manner that would serve the consumer’s best interest, given the consumer’s role as the ultimate source of revenue for such manufacturers. Unfortunately, cognizance of consumer’s interest in gaining access to affordable medications is apparently lacking, as evidenced by recent settlements between branded drug manufacturers and generic manufacturers, to such an extent that it amounts to collusion, as referred to by the FTC.  As stated by James M. Burns and Dickinson Wright, in their publication Third Circuit’s K-Dur Antitrust Litigation Decision Delivers a Long-Sought Win for the FTC:


“The settlements, pejoratively referred to as “pay for delay” and “reverse payment” settlements, have become increasingly common over the last ten years, and several circuits had previously held that, as long as the “delay” did not extend beyond the patent’s original expiration date, the settlements were not anticompetitive. The FTC has strenuously disagreed, arguing that the practice is anticompetitive and that it costs consumers billions of dollars each year in increased health care costs. Until K-Dur, however, the FTC had been largely unsuccessful in persuading the courts of this view”

The 2012 decision of In re K-Dur Antitrust Litig., 686 F.3d 197, 218 (3d Cir. 2012) has undoubtedly presented a profound dilemma in similarly litigated pharmaceutical cases. Declining prior decisions of the Second and Eleventh Circuit, the Third Circuit decision in K-Dur ruled that “any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market is prima facie evidence of an unreasonable restraint of trade.” K-Dur is currently on appeal due to its application of the “quick look rule”, and therefore, rejection, of the Eleventh Circuit’s “scope of patent test.” Under the quick look rule, also called per se analysis or rule of reason test, K-Dur concluded “the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint’s history, nature, and effect.” In contrast, the scope of patent test recognizes the rights of patent holders pursuant to antitrust laws.  Consequently, circuits which adhere to the scope of patent test, utilize a standard which evaluates: “(1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects.” Schering-Plough, 402 F.3d at 1066 (11th Cir. 2005).

In re K-Dur Antitrust Litig., and other matters, such as FTC v. Watson Pharmaceuticals, Inc., FTC v. Actavis, and Mutual Pharmaceutical Co. v. Bartlett include only a handful of the cases which are currently in litigation as a result of differing views concerning analytical approaches presented by application of one rule over the other. The complexities involved in such litigation necessitates an equally diverse level of expertise from pharmacy and pharmaceuticals related litigation experts, who are sufficiently knowledgeable to overcome the issues presented by ostensibly conflicting legislation. Accordingly, consulting services, litigation support, and testimony provided from Pharmaceutical Patent Expert Witnesses, Pharmaceutical Expert Witnesses, and Consumer Expert Witnesses, have become commonplace in so called “pay-for-delay” litigation. And with two proposed bills currently under consideration, which seek to directly address the issues of conflicting views stated herein, the continued use of such pharmaceutical litigation specialists may provide consumers, and the FTC as consumer advocate, with a long-awaited and necessary resolution, or in the very least determine an appropriate balance between antitrust and patent laws, and legislation pursuant to the Hatch-Waxman Act. As stated by Minnesota Senator Amy Klobuchar, in support of such resolutions of allegations concerning collusion between brand and generic drug manufacturers, “I have long supported efforts to crack down on this behavior and the recent rise in pay-for-delay agreements underscores the need for legislation to help make sure people have access to the drugs they need at a price they can afford.”

By: Alicia McKnight, J.D.