In 2002, the FTC alleged that Biovail Corporation and Elan Corporation had entered into an agreement to split the market for
the sales of 30 mg and 60 mg generic Adalat, a prescription drug used to treat hypertension.31 The FTC asserted that Elan had obtained a monopoly over the 30 mg generic Adalat, and that Biovail had obtained one over
the 60 mg product. The FTC added that through a series of distribution agreements, the companies avoided direct competition
and split their profits. The FTC complaint charged that the agreement resulted in consumers and others having "to pay artificially
high prices for generic Adalat products." 31(¶27) In recent remarks on the subject of the Federal Trade Commission v Perrigo Co. and Alpharma Inc.,32 FTC Chairman Deborah Platt Majoras noted that the FTC had attacked an alleged "conspiracy between Alpharma, Inc. and Perrigo
Company to limit competition for over-the-counter store-brand children's liquid Ibuprofen." Chairman Majoras also stated,
"Perrigo and Alpharma had signed an agreement allocating to Perrigo the sale of the product for seven years. In exchange for
agreeing not to compete, Alpharma received an up-front payment and a royalty on Perrigo's sales of children's liquid Ibuprofen.
Perrigo then, not surprisingly, raised prices."33
Because the stakes are so high, any potential non-competition agreement between biopharm companies must be reviewed carefully
by antitrust counsel.
Pharmaceutical Patent Settlement Agreements
Payments by brand pharmaceutical patent holders to generic companies to settle patent litigation have garnered intense
antitrust regulatory scrutiny and spawned substantial antitrust litigation in recent years. A generic abbreviated new drug
application (ANDA) holder may note its intention to market a generic product prior to the expiration of a patented new drug
application (NDA) drug by certifying to FDA that a patent or patents listed by a brand manufacturer in FDA's Orange Book are
either invalid or not infringed by the generic version. The generic company also must notify the holder of the approved NDA,
and the owner of the patent, of the filing of the ANDA. Generally, a patent infringement suit will then be filed against the
ANDA filer within 45 days to prevent the FDA review and approval process from proceeding. Such a suit automatically stays
FDA approval of the ANDA until the patent expires, a court determines that the patent is invalid, or 30 months pass.
According to the FTC, under the Hatch-Waxman Act, "the first applicant to submit an ANDA with a Paragraph IV Certification
for a generic version of a brand name drug is entitled to a 180-day period of marketing exclusivity before the FDA may grant
final approval of any other generic manufacturer's ANDA regarding the same brand name drug. This period does not begin to
run until either the generic drug is commercially marketed or a court enters final judgment that the patents subject to the
Paragraph IV Certification are invalid or not infringed." 34, 35(¶¶8-9) The complaints accompanying several FTC consent decrees have charged that such settlements effectively allocated markets
and injured competition "by preventing or discouraging the entry of competition in the form of generic versions of [pharmaceuticals]
into the relevant market[s]."35(¶34), 36 For example, in May 2000, the FTC charged that Abbott Laboratories paid Geneva Pharmaceuticals $4.5 million per month to
delay bringing to market a generic alternative to Abbott's brand-name hypertension and prostate drug Hytrin. The companies
entered into a consent decree with the Commission.