Washington, DC – The Federal Trade Commission has filed a complaint in federal district court alleging that several drug companies, including Endo Pharmaceuticals Inc., violated antitrust laws by using pay-for-delay settlements to block consumer access to some lower-cost generic drugs.
In its complaint the FTC alleges that Endo violated the Federal Trade Commission Act by paying Impax Laboratories, Inc. and Watson Laboratories, Inc. to delay the sale of approved generic versions of the pain medications Opana ER and Lidoderm.
The enforcement action marked the first case challenging an agreement not to market an authorized generic, often referred to as a “no-AG commitment,” as a form of reverse payment, according to the FTC.
“Settlements between drug firms that include ‘no-AG commitments’ harm consumers twice—first by delaying the entry of generic drugs and then by preventing additional generic competition in the market following generic entry,” Edith Ramirez, FTC chair, said in a statement. “This lawsuit reflects the FTC’s commitment to stopping pay-for-delay agreements that inflate the prices of prescription drugs and harm competition, regardless of the form they take.”
Opana ER is an extended-release opioid used to relieve moderate to severe pain. Lidoderm is a topical patch used to relieve pain associated with post-herpetic neuralgia, a complication of shingles.
Under federal law, the first generic applicant to challenge a branded pharmaceutical’s patent, upon final FDA approval, may be entitled to 180 days of exclusivity against other generic applicants. However, a branded drug manufacturer is permitted to market an authorized generic version of its own brand product at any time, including during that 180-day period.
According to the FTC, such no-AG commitments give the “first-filer” company the opportunity to capture all generic sales during the exclusivity period, enabling it to inflate prices.
The FTC complaint charges that in 2010 Endo and Impax illegally agreed that Endo would not compete by marketing an authorized generic version of Endo’s Opana ER until January 2013. In exchange, Endo allegedly paid Impax more than $112 million, including $10 million under a development and co-promotion agreement.
Endo used the delay to transition patients to a new formulation of Opana ER, thereby maintaining its monopoly power even after Impax’s generic entry, the FTC charged. Opana ER sales in the United States exceeded $250 million in 2010.
The commission complaint goes on to allege that in May 2012, Endo and its partners, Teikoku Seiyaku Co. Ltd. and Teikoku Pharma USA, Inc., illegally agreed with Watson Laboratories that it would not market a generic version of Endo’s Lidoderm patch until September 2013.
In exchange, Endo paid Watson hundreds of millions of dollars, including $96 million of free branded Lidoderm product, the FTC alleged. In 2012, Lidoderm sales in the United States approached $1 billion.
Endo allegedly also agreed that it would not market an authorized generic version of Lidoderm to compete with Watson for seven and a half months after September 2013, thus reducing competition and increasing prices for generic lidocaine patches.
Allergan plc, the parent company of Watson, and Endo International plc, the parent company of Endo Pharmaceuticals Inc. also were named in the complaint.
In addition, the FTC settled charges against Teikoku Seiyaku Co., Ltd. and Teikoku Pharma USA, Inc. by filing a stipulated order for permanent injunction. Under the order, the Teikoku entities are prohibited for 20 years from engaging in certain types of reverse-payment agreements, including settlements containing no-AG commitments.
The Teikoku companies will be allowed to enter other types of settlement agreements in which the value transferred is unlikely to present antitrust concerns, according to the FTC.
The antitrust complaint was filed in the U.S. District Court for the Eastern District of Pennsylvania.
(Sources: Federal Trade Commission, Associated Press)
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