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FTC “Barrs” Firm From Anticompetitive Agreements

This article was originally published in The Pink Sheet Daily

Executive Summary

Federal Trade Commission gets rare victory in settlement with Barr over charges that cash payment delayed entry of generic Ovcon.

Barr Laboratories has entered into an agreement with the Federal Trade Commission settling charges that a deal between Barr and Warner Chilcott unlawfully delayed market entry of Barr's generic version of Warner's birth control pill Ovcon (norethindrone/ethinyl estradiol).

Under the final order, entered Nov. 29 in the U.S. District Court for the District of Columbia, Barr is prohibited from entering into any branded/generic supply agreements with branded companies in which Barr is the ANDA filer and agrees to "refrain from or limit for any period of time the research, development, manufacturing, marketing, distribution or sale of" the generic product.

In addition, Barr must notify FTC of agreements with branded companies with potential to harm competition, except those that resolve a patent infringement claim.

FTC originally filed complaints in November 2005 against Warner and Barr, alleging their agreement over Ovcon violated antitrust laws (1 (Also see "FTC, States Sue Barr, Warner Chilcott Over Ovcon-35 Deal" - Pink Sheet, 7 Nov, 2005.)).

Warner paid Barr $19 million in 2004 in exchange for Barr delaying the launch of Balziva (the trade name of generic Ovcon) until May 2009.

Warner and FTC agreed to a settlement in October 2006 that prohibits Warner from entering agreements providing anything of value to ANDA filers, among other requirements (2 (Also see "FTC Enjoins Warner Chilcott From Providing “Anything Of Value” To ANDA Filers" - Pink Sheet, 24 Oct, 2006.)).

The final order, which will expire in 2017, closes another chapter in FTC's oversight of brand/generic deals. The commission has struggled in court against such arrangements, including another Barr deal, but the structure of the Warner/Barr agreement appears to have given FTC more leverage.

In contrast to many of the other deals, the Ovcon arrangement did not involve settlement of a patent challenge. Melvin Orlans, a former commission staffer who is now an attorney with Hunton & Williams, has advised firms to steer clear of "blatant" cash payments in settlements in order to avoid FTC scrutiny (3 (Also see "Pharmas Should Be Less Aggressive With Reverse Payments, Former FTC Counsel Advises" - Pink Sheet, 8 May, 2007.)).

Courts ruled against FTC in 2005 and again in 2006, saying so-called "reverse payments" are not violations of antitrust laws. The 2005 case involved a payment by Schering-Plough of $60 million to Upsher Smith and $15 million to American Home Products Corporation over K-Dur (potassium chloride). The U.S. Supreme Court declined to review the case in 2006 (4 (Also see "Supreme Court Denies Certiorari To FTC v. Schering-Plough" - Pink Sheet, 26 Jun, 2006.)).

In 2006, a Second Circuit Court of Appeals followed the Eleventh Circuit's Schering decision and dismissed a case involving Barr's deal with AstraZeneca over tamoxifen. A petition for writ of certiorari was denied by the Supreme Court in June 2007.

- Becky Jungbauer ([email protected])

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