On Wednesday, August 31, the Federal Trade Commission issued a report on "Authorized Generic Drugs: Short-Term Effects and Long-Term Impacts." In the report, the Commission indicated that it would take a hard-line approach to pay-for-delay deals in which brand-name drug makers agree to defer introduction of their own generic formulations in exchange for competitors delaying entry into the market. The report signals that the FTC pay-for-delay pharmaceutical patent settlements continue to be a "hot button" at the FTC, including deals that contain commitments by branded players to withhold generic versions of their own products.
On 5 August 2011, the Italian Competition Authority levied fines totalling €5,538,750 on Alliance Medical S.r.l., Toshiba Medical Systems Italia S.r.l., Philips S.p.A. and Siemens S.p.A. Each firm produces and sells electro-medical equipment used for diagnostic imaging and together they represent approximately 68 per cent of Italian sales.
The inquiry process started when Ge Medical Systems Italia S.p.A. lodged a complaint against the companies, alleging that they agreed to coordinate their response to the tender that Società Regionale Sanità of Campania issued for the provision (purchase and rental) of seven magnetic resonance machines and related support services. Under the infringing joint tender agreement, each company was allocated a pro-rata share of the business.
According to the Italian Competition Authority, the exchange of sensitive information and the formation of an agreement altered the normal competitive dynamics among businesses involved in the tender. Their commercial strategies were no longer independent as they were based on knowledge of the other companies’ strategies: Siemens and Alliance entered into a temporary association for the direct provision of three machines for purchase, while Philips and Toshiba were sub-contracted by Alliance to provide the remaining four machines for rental.
Laure Carapezzi, trainee lawyer in McDermott Will & Emery based in the Rome office, also contributed to this newsletter.
On May 10, the Federal Trade Commission announced that Sanofi-Aventis U.S. LLC and two generic drug makers had violated federal law by failing to notify antitrust authorities about agreements involving Sanofi’s insomnia drug Ambien CR. The FTC found no harm to consumers or competition in this instance and recommended no enforcement action, but the agency seized upon the opportunity to provide public guidance to the industry about the scope the filing requirement under the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA).
The MMA requires filing of certain types of agreements between a brand name drug company and a generic drug applicant that has submitted an Abbreviated New Drug Application that contains a certification that a patent asserted to cover the branded drug is invalid or not infringed (“Paragraph IV certification”). Failure to file within ten business days exposes the parties to penalties of up to $11,000 for each day the party is in violation of the notification requirement.
The Advisory Letters issued by the FTC analyze the Sanofi agreements and seek to clarify how the FTC interprets the Act. The FTC has signaled that it will recommend enforcement actions for future violations of the MMA. This announcement emphasizes the continuing concern that the FTC has shown for the anti-competitive impact of deals between brand name drug manufacturers and generic competitors. The FTC has in recent years repeatedly attacked so-called “pay-for-delay” deals.
For more information on the Sanofi settlement and to view the FTC Press Release with links to Advisory Letters, please visit: https://ftc.gov/opa/2011/05/sanofi.shtm.
McDermott Will & Emery’s International News, Issue 2, 2010, covers a range of legal developments of interest to those operating internationally. This issue focuses on Antitrust and Competition.
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