New Legislation Gives FTC New Role in Litigation Settlements

    1 July 2009

    The Senate recently introduced a bill (S. 396) to outlaw specific patent infringement settlements between generic drug companies and pharmaceutical or “brand name” drug companies who hold the patent rights. If passed, this new bill will have two effects. Generic drug manufacturers who apply for an Abbreviated New Drug Application (ANDA) may obtain 180 days of market exclusivity if certain conditions are met. This bill will first outlaw any settlements where a generic company agrees not to market a new generic drug during their 180 days of exclusivity, in exchange for money. These settlements are often called pay-for-delay” or “reverse payment” agreements. Second, the bill would give the Federal Trade Commission (FTC) the power to review these agreements, decide if they conform to the new law, and make exceptions if the FTC determines the agreement benefits the public. The House has introduced a parallel bill (H.R. 1706), making settlements illegal if the generic company receives anything of value and does not market the generic alternative.