Avoiding Antitrust Issues - - BioPharm International

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Avoiding Antitrust Issues


BioPharm International
Volume 1, Issue 8

Misleading Orange Book Listings

A "principal focus" of the FTC's recent enforcement activities against pharmaceutical companies "has been improper Orange Book listings."24, 25 (The FDA's Orange Book is formally known as Approved Drug Products With Therapeutic Equivalence Evaluations.) From the FTC's perspective, "an improper Orange Book listing strategy involves unilateral abuse of the Hatch-Waxman process itself to restrain trade."

In 2003, the Commission stated that it "has challenged conduct by firms that allegedly have 'gamed' the Hatch-Waxman framework to deter or delay generic competition. Our 'first generation' of such matters involved agreements through which a brand-name drug manufacturer allegedly paid a generic drug manufacturer not to enter and compete. . . .Our 'second generation' of enforcement activities has involved allegations that individual brand-name manufacturers have delayed generic competition through the use of improper Orange Book listings that trigger a Hatch-Waxman provision prohibiting the FDA from approving a generic applicant for 30 months."25 In a number of recent complaints, the FTC charged that pharmaceutical companies have filed erroneous or misleading information with FDA to delay the potential entry of generic competition.

For example, such charges were filed against Biovail Corporation by the FTC in October of 2002, as part of a consent order regulating Biovail's use of its antihypertension drug Tiazac.26 In its subsequent actions, the FTC alleged that Biovail had wrongfully acquired an exclusive license to a patented formulation of dilitiazem (the same active pharmaceutical ingredient as in Biovail's Tiazac), and then listed the patent in the Orange Book as claiming Tiazac — even though Biovail allegedly was aware that the "patent did not cover the formulation of Tiazac it was marketing."26(36) The FTC similarly charged Bristol-Myers Squibb in 2003, with "efforts to extend its monopoly by providing to the FDA false and misleading information concerning its [BuSpar anti-anxiety drug] patent," as well as its Taxol and Platinol anticancer drugs. 19(34-58,90-93,110-122)

To avoid such potential attacks, pharmaceutical companies must avoid filing false or misleading information with either the US PTO or FDA, and ensure that statements to FDA and PTO are consistent. Such advice comports with the general maxim that in dealing with the government, "credibility counts," and that one may well find oneself dealing with the same regulators again in the future.

Antitrust Issues in Exploiting Intellectual Property

Agreements Not to Compete or to Raise Prices or Reduce Output

Market Allocation Agreements
Following a long line of cases, the US Department of Justice's Antitrust Division and the FTC have jointly stated that "agreements of a type that always or almost always tends to raise price or reduce output are per se illegal,"27 citing Broadcast Music Inc. v Columbia Broadcasting Svs.28 The "per se" rule allows restraints of trade to be "condemned without further analysis."28 In Broadcast Music Inc. v Columbia Broadcasting Svs., the Supreme Court stated that where a "practice facially appears to be one that would always or almost always tend to restrict competition and increase output" rather than "one designed to 'increase economic efficiency and render markets more, rather than less competitive,"' it is considered to be "per se illegal" and may be condemned without further analysis. 7(p50) Moreover, citing Palmer v BRG of Georgia, Inc.29 (market allocation) and United States v Trenton Potteries Co.30 (price-fixing), the US Department of Justice and the FTC have declared, "Types of agreements that have been held per se illegal include agreements among competitors to fix prices or output, rig bids, or share or divide markets by allocating customers, suppliers, territories or lines of commerce."27


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