The Change In DoJ Views -- About Branded Drug Pay-Offs -- To Delay Generics From Reaching Market

Or. . . "No Pay to NOT Play". . . .

In 2006, the DoJ felt such payments -- like the one Merck and Ranbaxy entered (at Footnote (f) to that post, with a payment by Merck to Ranbaxy), which delayed Ranbaxy's esomeprazole (Merck's branded version of the compound is called Nexium^®) generic-market-entry from 2008, to 2014 -- were lawful. Now, with health care reform, and the all-out effort to bring down the costs of prescription medicines, among other matters, the wind has plainly shifted. I'll note, in passing that the EU's ECC shift-in-views was already well-underway in 2008, here (click on image, at right).

Thus, back here in the States, from this month's The Metropolitan Corporate Counsel:

. . . .While the FTC's position on reverse payments has remained constant, the Antitrust Division of the Department of Justice appears to have undergone a recent conversion. When the Supreme Court requested the views of the United States in the 2006 Schering-Plough case, DOJ -- then under Bush administration leadership -- opined that reverse payments were a logical response to the incentives created by the Hatch-Waxman framework, and largely adopted the Eleventh Circuit's favorable view of such settlements. Three years later, and under new leadership, DOJ appears to have reversed course. When the Second Circuit requested the views of the United States on the same issue this month, not only did DOJ argue that the court's existing reverse payment-favoring standard was erroneous, but that such settlements should be treated as presumptively unlawful. Although DOJ's participation in both of these cases was as an advisory friend-of-the-court, rather than a litigating party, the change in position is nevertheless significant, as courts may be more inclined to defer to views of the expert antitrust agencies when they present a united front. . . .

[S]ince the start of the 111th Congress in January 2009, several bills have been introduced that propose to amend existing statutes in order to regulate the competitive relationships between brand and generic companies, including by banning reverse payments. Notably, several of these bills have been incorporated into broader health care reform legislation being considered by Congress. . . .

If enacted, each proposal would prohibit reverse payments and cause the filer of an Abbreviated New Drug Application to forfeit exclusivity upon entering into any reverse payment agreement. H.R. 1706 and the Rush amendment to H.R. 3200 would do so by causing such action to be considered as an unfair and deceptive act or practice under Section 5 of the FTC Act. S. 369, in contrast, would amend the Clayton Act to prohibit such practices. Both proposals would provide the FTC with rulemaking authority to allow such reverse payment agreements if they are found to be beneficial to consumers. . . .

This, I think, makes the table below all the more compelling -- as all $16.8 billion in the combined-companies' annual revenue is on the line, in earnest -- generics will enter the U.S. market, and soon.