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FTC Settles Non-compete Allegations Against Two Pharmaceutical Companies
Practical Law Legal Update w-000-5313 (Approx. 3 pages)
FTC Settles Non-compete Allegations Against Two Pharmaceutical Companies
by Practical Law Antitrust
| Published on 19 Aug 2015 • USA (National/Federal) |
The Federal Trade Commission (FTC) settled with Concordia Pharmaceuticals Inc. and Par Pharmaceutical, Inc. over allegations that the parties maintained a non-compete agreement regarding ADHD drug Kapvay in violation of Section 5 of the FTC Act.
On August 18, 2015, the Federal Trade Commission (FTC) announced that it settled allegations that Concordia Pharmaceuticals Inc. and Par Pharmaceutical, Inc. entered into a non-compete agreement over sales of the generic version of the ADHD drug Kapvay in violation of Section 5 of the FTC Act. The FTC alleged that in a September 2013 agreement:
- Concordia granted Par the rights to its Kapvay license and any future Kapvay IP products, allowing Par to market its generic version of Kapvay beginning one week before the Kapvay patent expired.
- Concordia agreed to not market its own authorized generic version of Kapvay, or allow any other third party to do so, for five years.
- Par would share 35 to 50 percent of the generic Kapvay profits with Concordia.
The FTC reasoned that the agreement was not:
- Necessary to achieve efficiencies.
- Justified as compensation for rights to Kapvay IP.
In December 2014, when the FTC commenced its investigation into the agreement, Concordia launched an authorized generic version of Kapvay.
The FTC alleged that the agreement violated Section 5 by:
- Reducing competition for generic Kapvay.
- Depriving consumers of lower, competition-induced Kapvay prices.
- Likely allowing Par to charge supracompetitive prices for generic Kapvay.
In its decision and orders, the FTC required:
- Concordia to forfeit all rights to receive payments under the agreement, and to notify Par of its forfeiture.
- Par to cease and desist from enforcing any provision of the agreement impairing Concordia's rights to market an authorized generic version of Kapvay.
- Both parties to:
- cease and desist from entering into any agreement with any brand-name competitor prohibiting or preventing the sale, marketing or manufacturing of any authorized generic of a brand-name drug that is in effect after the relevant patents have expired; and
- for a period of 10 years, notify the FTC of any agreement to prohibit or prevent the sale, marketing or manufacturing of any authorized generic of a brand-name drug that is in effect before expiration of the relevant patent.
This settlement is the latest in the FTC's ongoing investigation into anticompetitive agreements between pharmaceutical companies, though typically the agreements in question involve reverse payment settlement agreements (also known as pay-for-delay agreements). For more on reverse payment settlement agreements, see Practice Note, Reverse Payment Settlement Agreements.