Questions Remain Over the Legality of Patent Settlement Agreements

US regulators, including state Attorneys General, recently rejected a three-way patent settlement agreement between innovators Sanofi-Aventis and Bristol-Myers Squibb, and the Canadian generic manufacturer Apotex, relating to the anti-clotting agent drug Plavix. The agreement required approval from both the states Attorney General and the US Federal Trade Commission (FTC). The proposed agreement had called for Apotex to delay the entry of its generic equivalent (clopidogrel bisulphate) until a few months before the drug's patent was to expire in 2011, in exchange for a minimum payment from the patent holders of $40 million. Despite recent appellate decisions that have held that such agreements are not anti-competitive, the FTC has continued to question their legality on the grounds that they substantially increase drug costs. Earlier this year Jon Leibowitz, Commissioner of the FTC, described the appellate decisions as "threatening the core of Hatch-Waxman" and called for the Supreme Court or Congress to reverse this trend. ("Hatch-Waxman" is the term used to describe the statute entitled the Drug Price Competition and Patent Term Restoration Act of 1984). The US Supreme Court failed to assist the FTC when it decided not to hear an appeal from a lower court's decision in the Schering case (See E-TIPS®, "US Supreme Court Refuses to Hear Generics Settlements Case" Vol 5, No 1, July 5, 2006). The recent rejection shows that the legality of patent settlement agreements remains uncertain. The FTC still contends that it has a vital role to play by enforcing the law and it appears that it will continue to do so. There may yet be another opportunity for the Supreme Court to weigh in if the one of the pending appellate cases on the issue is further appealed. For the Bristol-Myers Squibb and Sanofi-Aventis press release, see: http://www.bms.com/news/press/data/fg_press_release_6623.html For the Apotex press release, see: http://www.apotex.com/PressReleases/20060808-01.asp For the full text of remarks by Jon Leibowitz, Commissioner of the FTC ("Exclusion Payments to Settle Pharmaceutical Patent Cases: The Role of the Commission, Congress and the Courts", April 24, 2006), see: http://www.ftc.gov/speeches/leibowitz/060424PharmaSpeechACI.pdf Summary by: Michael Migus