The FTC, Pharmaceuticals, Antitrust & IP: A Grab Bag

1. The FTC, Pharmaceuticals, Antitrust & IP: A Grab Bag October 23, 2008 This presentation was prepared from public sources. The views expressed herein do not necessarily reflect those of the Federal Trade Commission

2. Session Overview • MMA filing review: what goes on inside the FTC? • Legislation to prohibit exclusion-payment settlements: what’s happening? • Authorized generics: antitrust problem or policy issue? • Follow-on biologics: what’s the FTC’s role? • Questions and comments.

3. What Agreements Must Be Filed Pursuant to MMA? • One party is an ANDA filer with a Paragraph IV certification. • Another party is either the brand or another ANDA filer for same drug. • The agreement concerns: • Manufacture, marketing, or sale of branded drug, or generic drug; or • The 180-day exclusivity period

4. The FTC’s MMA Review Process • Conduct an initial staff review • Read the agreement • Conduct market research using public sources • Discuss with counsel, if necessary • Convene the “pharmaceutical screening committee” to discuss the agreement • Decide whether to initiate an investigation

5. Three Questions to Ask in Analyzing MMA Agreements • Does the agreement restrict generic entry? • Is there compensation to the generic? • Are the parties sharing monopoly profits?

6. Will I Be Told If My MMA Agreement is Approved? • MMA is a notice-only statute – no waiting periods. • The FTC does not “approve” or “deny” agreements. • The staff will contact you if it would like more information.

7. Forms of Compensation in Brand/Generic Settlements Over Time *The Commission does not have data for 2003.

8. Legislation in the 110th Congress • “The Commission strongly supports legislation to address competitive problems with pay-for-delay settlements.” • FTC Testimony before Senate Subcommittee on Financial Services and General Government (May 14, 2008). • Bills in Senate (S.316) and House (H.R. 1902) • Would ban settlements in which generic: • Receives “anything of value” (subject to exceptions); and 2. Agrees not to market an ANDA product for any period.

9. Authorized Generics: Antitrust Problem or Policy Issue? • In recent years, branded companies have started marketing authorized generics at the same time a Paragraph IV generic starts its 180-day exclusivity period. • An “authorized generic” is a prescription drug that is marketed as a generic, but is manufactured under the branded company’s New Drug Application • The likely effect of this practice is subject to debate. • In the short run, entry of an authorized generic may benefit consumers by creating immediate generic competition. • In the long run, consumers may be harmed because of decreased incentives by generic companies to pursue entry on other drugs prior to patent expiration.

10. The FTC’s Authorized Generic Study • FTC has committed to Congress to undertake a study. • Gathering information from about 80 brand companies, 10 authorized-generic companies, and 100 generic companies. • Purposes of the study: • Understand the circumstances under which brands launch authorized generics. • Provide data and analysis of the effect of authorized generics on price competition and innovation. • Build on the economic literature about the effects of generic drugs on prescription drug pricing.

11. Agreements Not to Launch AGs • Some brand and generic companies are settling Paragraph IV litigation through the brand’s agreements not to launch an authorized generic. • How is this anything other than an agreement not to compete? • Such settlements are akin to the brand handing the generic a bag of cash.

12. The Paxil Example • $2.2 billion in annual U.S. sales at time of generic entry in 2003. • Apotex expected to earn $530 - $575 million during the180-day exclusivity period. • GlaxoSmithKline licensed Par to sell an authorized generic at same time as Apotex. • Apotex earned approximately $150 million during the 180-day exclusivity period.

13. Follow-On Biologics: The FTC’s Role • Analyze possible competition issues relating to follow-on biologics based on experience with patent settlements and authorized generics. • FTC Public Statements: • “The Competitive Implications of Generic Biologics,” speech by Commissioner Harbour, June 2007 • “The FTC’s Perspective on Biosimilars,” speech by Commissioner Harbour, September 2008 • FTC Letter to House Committee on Energy and Commerce, May 2008 • Upcoming FTC Workshop: Competition Issues Involving Follow-On Biologic Drugs, November 21, 2008.

14. www.ftc.gov