FTC, States Sue Barr, Warner Chilcott Over Ovcon-35 Deal
This article was originally published in The Pink Sheet Daily
Executive Summary
Lawsuit claims companies' agreement regarding generic Ovcon-35 was anti-competitive.
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The Federal Trade Commission, 20 states and the District of Columbia are alleging that an agreement between Warner Chilcott and Barr related to generic Ovcon-35 is anti-competitive. In a lawsuit filed Nov. 7 in Washington, D.C. federal court, the plaintiffs charged that Warner Chilcott's payment of $20 mil. to Barr to keep a generic version of the oral contraceptive off the market until 2009 violated antitrust law. The complaint alleges that the agreement violates the Sherman Act and Clayton Act as well as the various states' laws. In September 2001, Barr filed the first ANDA for a generic version of Ovcon-35 (norethindrone/ethinyl estradiol), which has been available in the U.S. since 1976. Barr had expected to launch its version of the oral contraceptive by the end of 2003 and planned to sell it at 30% less than the cost of the reference listed drug, the complaint states. Warner Chilcott (formerly Galen Chemicals) expected to lose at least half of Ovcon-35's new prescriptions within the first year of the generic's launch, FTC said (1 (Also see "Warner Chilcott Buyout Values Women’s Health Rx Firm At $3 Bil." - Pink Sheet, 27 Oct, 2004.)). On March 24, 2004, Barr and Warner Chilcott entered into an agreement giving Warner Chilcott the exclusive option to market, distribute and sell Barr's generic version of Ovcon-35. Following the April 2004 approval of Barr's ANDA, Warner Chilcott exercised its option under the agreement, paying Barr $19 mil.; Barr had received $1 mil. upon signing the agreement. In addition, Barr agreed not to launch its own generic version of Ovcon-35 until May 2009 (2 (Also see "Warner Chilcott Ovcon 35 Launch Delayed By Bristol Manufacturing" - Pink Sheet, 12 Aug, 2004.)). The states are seeking civil penalties and/or equitable relief under their states' laws, claiming the agreement prevented patients from purchasing the less-expensive generic option. In a Nov. 7 release, Barr announced its intention to defend itself, noting that FTC had initially reviewed the agreement and "expressed no objection." The generics firm also noted that upon expiration of the five-year deal in 2009, Warner Chilcott can extend the license for an additional five years. In a separate release Nov. 7, Warner Chilcott seconded Barr's opinion that the deal is not anticompetitive, adding that Ovcon-35 currently has less than a 2.5% share of the combined hormonal contraceptive market. - Mary Bruce |