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FTC v. Actavis, Inc. - 570 U.S. 136

Rule:

A drug manufacturer, wishing to market a new prescription drug, must submit a New Drug Application to the federal Food and Drug Administration (FDA) and undergo a long, comprehensive, and costly testing process, after which, if successful, the manufacturer will receive marketing approval from the FDA. 21 U.S.C.S. § 355(b)(1). Section 355(b)(1) requires, among other things, “full reports of investigations” into safety and effectiveness; “a full list of the articles used as components”; and a “full description” of how the drug is manufactured, processed, and packed.

Facts:

Petitioner Federal Trade Commission (FTC) filed suit, alleging that respondents, a patent holder and generic drug manufacturers, violated §5 of the Federal Trade Commission Act and antitrust laws by unlawfully agreeing to abandon their patent challenges, to refrain from launching their low-cost generic drugs, and to share in Solvay's monopoly profits.  The patent holder obtained a patent for a brand-name drug. The generic drug manufacturers filed Abbreviated New Drug Applications for a generic drug modeled after the patented drug. The district court dismissed the FTC's complaint. The United States Court of Appeals for the Eleventh Circuit affirmed. Certiorari was granted.

Issue:

Did the FTC allege sufficient facts that would support its prosecution against a patent holder and generic drug manufacturers for violating the antitrust laws?

Answer:

Yes.

Conclusion:

The United States Supreme Court reversed and remanded the case for further proceedings after determining that the appellate court should have allowed the FTC’s lawsuit to proceed because, inter alia, (1) reverse payment settlements could sometimes violate the antitrust laws, (2) the fact that the agreement’s anticompetitive effects fell within the scope of the exclusionary potential of the patent could not immunize the agreement from antitrust attack, (3) the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), 98 Stat. 1585, did not embody a statutory policy that supported the appellate court’s view, (4) the specific restraint at issue had the potential for genuine adverse effects on competition, (5) the anticompetitive consequences would at least sometimes prove unjustified, and (6) the anticompetitive considerations outweighed the desirability of settlements.

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