Bristol/Teva “Authorized” Generic Agreement Approved By FTC
This article was originally published in The Pink Sheet Daily
Executive Summary
A settlement allowing Teva to launch generic carboplatin in June is not anti-competitive, the Federal Trade Commission says. The agreement encourages price competition and gives Teva an incentive to launch under an ANDA as soon as possible, FTC says.
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The Federal Trade Commission is giving its formal blessing to an "authorized" generic agreement between Bristol-Myers Squibb and Teva involving the first generic version of Paraplatin (carboplatin). FTC issued an advisory 1 opinion May 24 allowing Bristol and Teva to proceed with an April licensing deal negotiated to settle patent litigation. Under the agreement, Teva will launch a version of carboplatin under Bristol's NDA on June 24, almost four months before Paraplatin loses pediatric exclusivity Oct. 14 (2 (Also see "Paraplatin "Authorized" Generic To Be Launched By Teva" - Pink Sheet, 27 Apr, 2004.)). Under a 2003 consent agreement, Bristol is required to submit all patent litigation settlements to FTC for review. The consent agreement followed an investigation into Bristol's patent defense tactics for BuSpar, Platinol and Taxol . FTC maintained that the agreement with Teva does not raise the type of "reverse payment" issues the agency has challenged in the past. "Unlike the settlement that led to entry" of the consent order, "in which BMS allegedly paid the generic challenger to defer entry beyond the date that would represent an otherwise reasonable litigation compromise, this settlement does not involve payment to Teva in exchange for Teva's agreement not to enter the market," FTC said. "Thus, we presume the entry date, three months prior to the expiration of the exclusivity period, reflects a reasonable assessment of BMS's and Teva's respective litigation positions." "The settlement agreement provides no mechanism for BMS to share supracompetitive profits with Teva," FTC said. "Teva earns profits only by competing." Because Teva will pay royalties on its "authorized" generic, "Teva will have an incentive to bring its ANDA drug products to the market as soon as possible after the exclusivity period." "Importantly, the settlement agreement does not prevent Teva from marketing its own product under its ANDA at any time after Oct. 14, 2004," FTC said. "Even while selling BMS's products, Teva retains the ability and incentive to price independently." The FTC opinion is the clearest indication to date that the agency has no fundamental concerns with "authorized" generic agreements. Generic drug companies - including Teva - have voiced concern that "authorized" agreements can be anticompetitive. (Teva distinguishes the carboplatin deal from other agreements because it holds "first-to-file" exclusivity on carboplatin. In other cases, an "authorized" competitor can undercut the value of generic exclusivity.) The Generic Pharmaceutical Association has taken a position against authorized generic deals that undercut the value of patent challenges (3 (Also see ""Authorized" Generics Reduce The Incentive For Patent Challenges, GPhA Says" - Pink Sheet, 2 Mar, 2004.)). - Michael McCaughan |