On July 14 post here on The Legal Pulse, WLF’s Rich Samp reported on a federal magistrate judge’s decision in an ongoing saga involving the Federal Trade Commission (FTC), its quest to expose what it believed were anticompetitive actions by Watson Pharmaceutical, and the resistence of Watson’s CEO, Paul Bisaro, against a FTC effort to subpoena him. As Rich explained, Judge Alan Kay found enough evidence existed to demonstrate “the strong possibility . . . that the FTC may have exceeded its authority by using its investigatory power to pressure Watson,” leading the judge to take the extraordinary step of requiring that FTC respond to Mr. Bisaro’s interrogatories.
FTC officials not only responded to the questions, but they also filed a motion for leave to supplement the record and several new declarations with the court. In a brief filed August 9, Watson’s Bisaro explains how FTC’s interrogatory responses and declarations do nothing more than strengthen Bisaro’s case that FTC is using its subpoena power for the improper purpose of forcing Watson into a bad business deal with a competitor. FTC’s answers, for instance, confirm extensive contacts between Commission officials and Apotex, the company to which FTC wanted Watson to sell its exclusivity rights to market a generic version of Provigil, as well as FTC’s outreach to Watson to urge such a deal. The answers also don’t reject Watson’s contention that FTC obtained confidential information from FDA about Watson’s status as a “first filer,” and then shared that information with competitor Apotex. FTC’s answers further ignore Watson’s contention that an FTC official threatened to reopen an old investigation if Watson refused a deal with Apotex.
The Bisaro brief strongly posits that FTC did not initially contact Watson about concerns the Commission had about a potentially unlawful agreement with Provigil’s patent holder, Cephalon. It was only after Watson refused to deal its exclusivity rights that FTC made allegations of potential anticompetitive conduct. Clearly, despite no factual support whatsoever and an affirmative, sworn statement from Watson’s General Counsel to the contrary, FTC felt a settlement deal with Cephalon where Watson would delay its release of generic Provigil in return for financial considerations was imminent. So, as Judge Kay wrote in his order, FTC put Watson “between a rock and a hard place” by trying to impose a bad business deal on Watson, and then using its refusal to make that deal as prima facie evidence that Watson had made an agreement with Cephalon that Watson keep, and sit on, its exclusive marketing rights.
FTC’s use of its power to impose such a Hobson’s Choice and, at the same time advance its anti-consumer crusade against generic patent settlements, is outrageous. Watson and its CEO have taken a courageous, and regretfully rare, stand in defense of their due process rights. The court should now declare the record before it complete and closed, and grant Mr. Bisaro’s request to quash the Commission’s subpoena.