FTC patent action against S-P "took no account of settlement benefits"

In the US Federal Trade Commission's recent investigations intoagreements between brand-name and generic drugmakers, which it says are aimed at keeping generic competition off the market (Marketletters passim, but particularly April 9), the FTC "improperly injects itself into drug patent settlements," according to a Legal Backgrounder document published this month by the Washington Legal Foundation.

Authors Geraldine Alexis and Zorah Braithwaite note that the enforcement actions brought by the FTC against three sets of pharmaceutical manufacturers over the past two years (Hoechst Marion Roussel and Andrx; Abbott Labs and Geneva Pharmaceuticals; Schering-Plough and Upsher-Smith Labs) involve similar facts and the same legislative scheme regarding the marketing of generic drugs. However, they add, each case differs and, collectively, they represent the FTC's attempt to expand its enforcement powers toward the outer limit of established law.

Whether settlements violate antitrust laws is an issue suffused with complexity, say the authors, but no court has yet provided a comprehensive framework for analyzing whether a particular settlement agreement violates the Sherman Act. Moreover, with its most recent action, concerning S-P and Upsher-Smith, the FTC has begun scrutinizing more than just agreements reached pending the outcome of litigation, turning its focus to settlement agreements and beginning to judge the merits of underlying patent infringement claims.