Legal setbacks and legislative inaction may push US FTC to consider 'Plan C' to address patent settlement agreements

Recent judicial setbacks for the USA’s Federal Trade Commission) in actions challenging patent settlement agreements (often called  “pay-for-delay” or “reverse payment” deals) and opposition from both Republicans and Democrats to the inclusion of the Preserve Access to Affordable Generics Act (S 369) in the Fiscal Year 2011 Financial Services and General Government Appropriations Bill (S 3677) may cause the FTC to consider “Plan C” to address such agreements, according to the agency’s Commissioner J Thomas Rosch.

During the World Generic Medicine Congress Americas 2010 earlier this month, Commissioner Rosch remarked that the FTC is mulling issuing its own rules next year that would shift the burden of proof to require companies to prove that patent settlement agreements are not anti-competitive.

In late July, the US Senate Committee on Appropriations approved the inclusion of the Preserve Access to Affordable Generics Act in the report (Senate Report No 111-238) accompanying S 3677. The legislation would make patent settlement agreements presumptively anticompetitive and unlawful if challenged by the FTC, unless it can be demonstrated “by clear and convincing evidence that the pro-competitive benefits of the agreement outweigh the anticompetitive effects of the agreement,” commented Kurt Karst of US law firm Hyman, Phelps & McNamara on its FDA Law Blog