FTC Issues First Post-Actavis Staff Report on Drug Patent Settlement Agreements; No Meaningful Conclusions on the Effects of Actavis Decision Can Yet Be Drawn

By Kurt R. Karst –      

Last week, the Federal Trade Commission (“FTC”) announced the issuance of the Bureau of Competition’s annual summary of agreements filed with the Commission during the last fiscal year (Fiscal Year 2013) – Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  The report was issued less than two months after U.S. Senators Amy Klobuchar (D-MN) and Charles Grassley (R-IA) sent a letter to FTC Chairwoman Edith Ramirez requesting prompt release of not only the FY 2013 numbers, but the numbers from FY 2014 as well. 

The FTC’s FY 2013 Staff Report is the first report issued since the U.S. Supreme Court’s June 17, 2013 decision in FTC v. Actavis, Inc., 133 S. Ct. 2233 (2013), which addressed the standards that courts should apply in drug patent settlement cases (also known as “pay-for-delay” or “reverse payment” cases).  (See our previous post here regarding the Actavis decision, here for more on FTC action concerning patent settlement agreements, and here for our post on the FTC’s FY 2012 summary.)  According to the FTC, however, “[b]ecause this decision came nearly three quarters of the way through FY 2013, there are not yet enough post-Actavis settlements to draw meaningful conclusions from the [FY 2013] data.”

The Actavis decision has resulted in significant litigation.  In fact, there’s been sooo much litigation that it’s been difficult to keep up with all of the action.  That’s why we’re thankful for a recent summary of drug patent settlement agreement litigation provided by our friends Seth Silber, Jonathan Lutinski, and Ryan Maddock over at Wilson Sonsini Goodrich & Rosati.  Their article, titled “‘Good Luck’ Post-Actavis: Current State of Play on ‘Pay-for-Delay’ Settlements,” is a helpful read.  And more litigation – both from the FTC and private parties – is likely on the horizon.  Indeed, FTC Commissioner Terrell McSweeny said in a speech earlier this month that “I expect that the Commission will continue to be an integral player in bringing cases, where appropriate, post-Actavis.”

According to the FTC Staff Report, FY 2013 saw 145 final patent settlement agreements filed with the Commission, which is a small increase from FY 2012.  But only 29 of the 145 agreements “potentially involve pay for delay because they contain both compensation from a brand manufacturer to a generic manufacturer and a restriction on the generic manufacturer’s ability to market its product in competition with the branded product.”  That’s a drop from the 40 of the 140 agreements reported in FY 2012.  In addition, 41 of the 145 agreements reportedly involved ANDA sponsors eligible for 180-day exclusivity, of which 13 are tagged by the FTC as “potential pay-for-delay settlements.”  As the FTC points out in the report, 13 is the lowest number on record since FY 2008 and represents a “substantial decrease from the previous three years.” 

When we at the FDA Law Blog play around with the numbers, however, it shows that 13 of 145 is 9%.  That’s the lowest number on record since the first year of reported numbers.  Below is a table based on the numbers provided in the FTC Staff Report showing how the FY 2013 figures stack up against the numbers from previous years – as well as overall totals.  And because a picture is worth a thousand words, we also include a graph displaying the data. 

Turning to Congress, legislators have been relatively quiet over the past year with respect to legislation that would curb – or effectively ban – drug patent settlement agreements.  In fact, the last relevant bill we recall was introduced in December 2013: H.R.3709, the Protecting Consumer Access to Generic Drugs Act of 2013 (see our previous post here). 

Despite the relative calm from Congress over the past year, however, things could once again heat up with the 114th Congress.  Indeed, Senator Klobuchar, who, as noted above, was seeking prompt release of data from the FTC, recently penned commentary that appeared in the StarTribune saying that one of three “wise solutions that could unlock a future of more affordable drugs” is enactment of S.214, the Preserve Access to Affordable Generics Act.  (See our previous post on that bill here.)