FDAnews Drug Daily Bulletin

If allowed to stand, a ruling upholding a 1997 settlement between Bayer and Barr Laboratories will dissuade generic companies from pursuing patent challenges and threaten competition in the U.S. pharmaceutical industry, the FTC argues in a recently filed amicus curiae brief.

Plaintiffs consisting of direct and indirect purchasers of Bayer’s antibiotic Cipro (ciprofloxacin HCl) have launched an appeal in the U.S. Court of Appeals for the Federal Circuit after a district court ruled that the settlement fell within the scope of Bayer’s patent rights and therefore was not subject to antitrust claims.

The settlement ended patent infringement litigation that Bayer initiated after Barr filed an abbreviated new drug application for Cipro with a Paragraph IV certification for Bayer’s ’444 patent. Weeks before trial, the companies entered into an agreement under which Bayer paid Barr nearly $50 million to convert its Paragraph IV certification into a Paragraph III and then made quarterly payments to Barr up to the time the ’444 patent expired in December 2003.

When the plaintiffs challenged the settlement on antitrust grounds, a U.S. District Court for the Eastern District of New York judge ruled that “any conduct within the scope of the patent is exempt from antitrust scrutiny.”

The plaintiffs contended that Barr might have prevailed in patent litigation and successfully invalidated the ’444 patent. Similarly, the FTC argued that because “Bayer might have won its patent litigation had it not paid Barr to settle does not alter the fact that Bayer obtained its market exclusivity through a cash payment and not through the strength of its patent, in violation of the antitrust laws’ prohibition on buying off potential albeit uncertain competition.”

The FTC’s brief is available at www.ftc.gov/os/2008/01/080129cipro.pdf.