Cross-posted at Forbes.com’s “On the Docket”
As several past Legal Pulse posts have discussed, the Federal Trade Commission (FTC) has been engaged in a ten-year crusade to put an end to certain settlements of drug patent litigation. Such settlements terminate patent litigation which costs both branded and generic companies millions of dollars and could delay the introduction of a generic product for years after the branded drug’s patent has expired. To end the litigation, the branded drug maker provides financial compensation to the generic producer, who in turn acknowledges the validity of the patent at issue and agrees to delay release of the generic copy for a specified period of time. FTC and numerous private plaintiffs have challenged these settlements as anti-competitive. In nearly every instance, reviewing courts have found that as long as the agreement does not extend the branded drug’s patent protection, these private contractual arrangements are lawful. FTC has taken its campaign to Congress, pushing a bill that would essentially outlaw these settlements.
The U.S. Court of Appeals for the Second Circuit, sitting en banc, dealt the FTC’s anti-settlement campaign a serious blow on September 7, denying private plaintiffs’ request that the entire court reconsider an April 29, 2010 three-judge panel ruling that a settlement involving the antibiotic Cipro was lawful under the Sherman Antitrust Act. In the April In re: Ciprofloxacin Hydrochrolide Antitrust Litigation ruling, an unsigned (per curiam) opinion affirmed a federal trial court’s dismissal of the plaintiffs’ complaint.
The per curiam opinion went out of its way to note how the federal government (which had filed an amicus brief supporting the private plaintiffs) and some legal academics firmly believed that such “pay-for-delay” settlements were illegal. The panel wrote that it was bound by Second Circuit precedent and then spent over three pages explaining why the losing parties should request an en banc rehearing.
Given the specificity of the three-judge panel’s invitation, along with the rehearing amicus support of 34 state attorneys general, the U.S. government, various academics and activist groups, and the American Medical Association, the Ciprofloxacin plaintiffs must have been stunned by the Second Circuit’s denial of rehearing.
Curiously, Judge Rosemary Pooler, who was on the original three-judge panel, wrote an impassioned five-page dissent from denial of rehearing which featured a footnote stating that her views also reflected the opinions of Judges Jon Newman and Barrington Parker (who were the other two judges on the original panel). Judges Newman and Parker did not have a vote on the rehearing due to their status as senior judges. This might explain the per curiam nature of the April panel decision and the regretful tone in which the opinion was written.
In the face of intense pressure from federal and state law enforcement, not to mention a number of their own judges, the Second Circuit stood by its precedent. And once again, FTC has emerged empty-handed from court, deprived of a new talking point in its anti-patent settlement campaign. It will be interesting to watch the FTC and its crusading Commissioners try to dismiss the significance of Ciprofloxacin while agitating for a legislative solution it is absolutely convinced the public requires.