A long time ago, I was an expert witness in a pay-for-delay (reverse payment) case where, to me, the facts were clear.  The patent settlement meant that the generic product would be assured entry into the market 5 years before the patent expired (can you guess what case that was?).  In that case, I thought it was a no-brainer, but you just never know.  The firms lost the case and had to pay large fines and the generic was delayed to market (if I remember correctly).

The issue of patent settlement to me is like betting on the black or red in roulette.  There is about a 50/50 chance you may win and a 50/50 chance you may lose.  While the percentages might be a little different, such are the chances with going to court on a patent, as you never know if you will win or lose.  In the high stakes world of Hatch-Waxman (and now also in the biosimilar world – with 10 biosimilars approved but only three being currently marketed), if the FDA issues final approval but the patent issues have not been resolved in favor of the generic applicant, the choice facing the generic applicant is “do I go to market at risk or do I wait for final patent resolution?”.  The first choice could be a “bet-the-company” proposition, because if the generic does go to market at risk and the innovator’s patent is ultimately upheld, then the generic applicant could be facing treble damages (hence the “bet-the-company” term), especially if the innovator drug is a blockbuster.

I could never understand how assuring a drug would hit the market prior to patent expiration was somehow anticompetitive, especially if the patent was fairly strong.  However, the courts and the FTC don’t always see it that way.  Remember, if the patent is found to be valid, then the patent monopoly continues and the American public must wait until patent expiry to be able to obtain a lower priced generic.  In the most recent dismissal in the FTC complaint where Impax and Endo entered into an anticompetitive reverse-payment arrangement, the FTC administrative law judge (ALJ) wrote that he:

  • found it unlikely that Impax would launch a generic version of Endo’s Opana ER before January 2013; such a launch would have been considered “at risk” because it would have predated final court decisions in related patent litigation. If a generic company launches a product before a non-appealable court decision or patent expiration, brand companies can be awarded damages, according to Judge Chappell’s Initial Decision;
  • found that it would have been economically disadvantageous for Impax to launch generic Opana ER under this type of “at risk” scenario, because it is a small pharmaceutical company with revenues in 2019 of less than $1 billion, and it could not “bet the company” on any one product;
  • rejected Complaint Counsel’s argument that the agreement between Impax and Endo would harm competition. “[T]he real world procompetitive benefits of the Endo-Impax Settlement are substantial,” Judge Chappell wrote.

The FTC release (here) also says:

In his decision, Judge Chappell noted that the January 2013 entry date and the patent license provisions for Opana ER enabled Impax to introduce a generic version eight months before Endo’s original patents for the drug expired.  “Impax has sold generic Opana ER without interruption for more than five years, since launching its product in January 2013,” Judge Chappell noted.

I am not a lawyer, just a run-of-the-mill regulatory scientist, and perhaps I look at things differently and too simply, but to me, an early entry prior to patent expiration does more to bolster competition than restrict it.  Why? Because the patent game is a risk and a patent loss can be devastating to a firm if they market at risk.  And, of course, the facts of a case do need to be taken into account to assure there is no funny business, but maybe at least this ALJ has seen the picture as I do.  Who knows? The law is a funny thing!