Fifth Circuit sides with FTC in major pay-for-delay settlement case
The US Court of Appeals for the Fifth Circuit on Tuesday upheld the Federal Trade Commission’s ruling that generic drugmaker Impax Laboratories should be charged with antitrust violations for accepting payments worth about $100 million to delay the entry of a generic opioid for more than two years.
The court’s opinion upheld the FTC’s anticompetitive findings on the deal between Impax (now owned by Amneal Pharmaceuticals) and Endo Pharmaceuticals, under which Endo committed to not market an authorized generic, which increased Impax’s projected profits by $24.5 million. Endo agreed to pay Impax credits for the shrunken market that Impax would inherit if, as expected, Endo made a successful hop to a reformulated Opana ER.
“The $102 million Endo ultimately paid is likely a good approximation of the parties’ expected value for these credits,” the Fifth Circuit said.
The wider ramifications of the ruling may mean less brand name drugmakers will pay generic firms to keep the branded products on the market longer.
“The number of pay-for-delay settlements has been falling since Actavis, and this ruling from one of the most conservative courts in the country will only accelerate that trend,” Michael Carrier, distinguished professor at Rutgers Law School, told Endpoints News via email.
The Fifth Circuit also noted that “a large reverse payment might be justified if it represents ‘avoided litigation costs or fair value for services.’ That is not the case here.” Neither the saved costs of forgoing a trial nor any services Endo received justified these payments to Impax, the court said. “Substantial evidence supports the Commissions’ finding that the reverse payment settlement threatened competition.”
Carrier called the opinion a “HUGE win for consumers and FTC.” He also noted that in response to Impax’s claim that this ruling means the end of all settlements, the court took the calculation from his brief on behalf of 82 professors that the FTC challenged only 6 of the 1336 brand/generic settlements between 2000 and 2015.