FTC submits proposed Amicus Brief on "No-Authorized-Generic" commitments in drug patent settlements

The US Federal Trade Commission has asked the US District Court for the District of New Jersey to accept an amicus brief that addresses the application of the US Supreme Court’s recent ruling in FTC versus Actavis to a patent settlement containing a “no-authorized-generic” commitment. The FTC submitted the brief in the case of In re Effexor XR Antitrust Litigation.

An authorized generic is chemically identical to its counterpart brand-name drug, but sold by the brand company or its representative as a generic product under the same regulatory approval as the brand-name drug. A no-authorized-generic commitment means that the brand-name drug firm, as part of a patent settlement, agrees that it will not launch its own authorized-generic alternative when the first generic company begins to compete. An FTC empirical study of the competitive effects of authorized generics found that when a brand company does not launch an authorized generic during the exclusivity period reserved for the first-filing generic under the Hatch-Waxman Act, it substantially increases the first generic company’s revenues, and consumers pay higher prices for the generic product.

In Actavis, the Supreme Court held that “reverse-payment” patent settlements (also called pay-for-delay deals) – agreements in which a brand-name drug manufacturer pays a would-be competitor to abandon its patent challenge and agrees not to sell its generic drug product for a number of years – are not immune from antitrust scrutiny and are to be evaluated using traditional antitrust factors.