The FTC, Pharmaceuticals, Antitrust & IP: A Grab Bag October 23, 2008 This presentation was prepared from public sources. The views expressed herein do not necessarily reflect those of the Federal Trade Commission

Session Overview 1.MMA filing review: what goes on inside the FTC? 2.Legislation to prohibit exclusion-payment settlements: what’s happening? 3.Authorized generics: antitrust problem or policy issue? 4.Follow-on biologics: what’s the FTC’s role? 5.Questions and comments.

What Agreements Must Be Filed Pursuant to MMA? One party is an ANDA filer with a Paragraph IV certification. Another party is either the brand or another ANDA filer for same drug. The agreement concerns: –Manufacture, marketing, or sale of branded drug, or generic drug; or –The 180-day exclusivity period

The FTC’s MMA Review Process Conduct an initial staff review –Read the agreement –Conduct market research using public sources –Discuss with counsel, if necessary Convene the “pharmaceutical screening committee” to discuss the agreement Decide whether to initiate an investigation

Three Questions to Ask in Analyzing MMA Agreements Does the agreement restrict generic entry? Is there compensation to the generic? Are the parties sharing monopoly profits?

Will I Be Told If My MMA Agreement is Approved? MMA is a notice-only statute – no waiting periods. The FTC does not “approve” or “deny” agreements. The staff will contact you if it would like more information.

Forms of Compensation in Brand/Generic Settlements Over Time No Antitrust Actions Antitrust Actions Initiated Schering and Tamoxifen Decisions Post- Schering and Tamoxifen Post- Schering and Tamoxifen * Settlements w/ comp. and deferred entry Cash Side Deals No Authorized Generic * The Commission does not have data for 2003.

Legislation in the 110 th Congress “The Commission strongly supports legislation to address competitive problems with pay-for-delay settlements.” –FTC Testimony before Senate Subcommittee on Financial Services and General Government (May 14, 2008). Bills in Senate (S.316) and House (H.R. 1902) Would ban settlements in which generic: 1.Receives “anything of value” (subject to exceptions); and 2. Agrees not to market an ANDA product for any period.

Authorized Generics: Antitrust Problem or Policy Issue? In recent years, branded companies have started marketing authorized generics at the same time a Paragraph IV generic starts its 180-day exclusivity period. An “authorized generic” is a prescription drug that is marketed as a generic, but is manufactured under the branded company’s New Drug Application The likely effect of this practice is subject to debate. –In the short run, entry of an authorized generic may benefit consumers by creating immediate generic competition. –In the long run, consumers may be harmed because of decreased incentives by generic companies to pursue entry on other drugs prior to patent expiration.

The FTC’s Authorized Generic Study FTC has committed to Congress to undertake a study. –Gathering information from about 80 brand companies, 10 authorized-generic companies, and 100 generic companies. Purposes of the study: –Understand the circumstances under which brands launch authorized generics. –Provide data and analysis of the effect of authorized generics on price competition and innovation. –Build on the economic literature about the effects of generic drugs on prescription drug pricing.

Agreements Not to Launch AGs Some brand and generic companies are settling Paragraph IV litigation through the brand’s agreements not to launch an authorized generic. How is this anything other than an agreement not to compete? Such settlements are akin to the brand handing the generic a bag of cash.

The Paxil Example $2.2 billion in annual U.S. sales at time of generic entry in Apotex expected to earn $530 - $575 million during the180-day exclusivity period. GlaxoSmithKline licensed Par to sell an authorized generic at same time as Apotex. Apotex earned approximately $150 million during the 180-day exclusivity period.

Follow-On Biologics: The FTC’s Role Analyze possible competition issues relating to follow-on biologics based on experience with patent settlements and authorized generics. FTC Public Statements: –“The Competitive Implications of Generic Biologics,” speech by Commissioner Harbour, June 2007 –“The FTC’s Perspective on Biosimilars,” speech by Commissioner Harbour, September 2008 –FTC Letter to House Committee on Energy and Commerce, May 2008 Upcoming FTC Workshop: Competition Issues Involving Follow-On Biologic Drugs, November 21, 2008.