Federal Trade Commission Rejected in “Reverse Payment” Suit

Kevin Noonan, Jun 27, 2012

The Federal Trade Commission in recent years has identified a practice it considers to be a threat to consumers regarding generic drugs. This threat is posed by the practice of “reverse payments” in ANDA litigation. Typically, in these arrangements a branded drug manufacturer settles litigation with a generic challenger brought under the Hatch-Waxman Act and such settlements often involve a payment from the branded to the generic drug maker.

In the FTC’s view, such payments should be illegal as anticompetitive market behavior amounting to a restraint on trade and a violation of the antitrust laws. However, despite judicial, legislative, and administrative attempts to ban the practice, neither Congress nor the courts have been willing to do so. While a ban on what the FTC characterizes as “pay for delay” practices have been a part of the Obama administration’s budgets for the past few years, nothing has come of it.

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