FTC cracks down on generic agreements

The Federal Trade Commission charged two drug makers, Hoechst Marion Roussel (now Aventis) and Andrx Corp., with engaging in anticompetitive practices, alleging that Hoechst, the maker of Cardizem CD,® a widely prescribed drug for treatment of hypertension and angina, agreed to pay Andrx millions of dollars to delay bringing its competitive generic product to market. The commission also announced a proposed settlement with two other drug makers, Abbott Laboratories, Abbott Park, IL, and Geneva Pharmaceuticals, Inc., resolving charges that the companies entered into a similar anticompetitive agreement in which Abbott paid Geneva substantial sums to delay bringing to market a generic alternative to Abbott's brand-name hypertension and prostate drug, Hytrin.®

"The financial arrangements between the branded and generic manufacturers were designed to keep generic versions of Cardizem CD and Hytrin off the market for an extended period of time," said Richard Parker, director of the FTC's Bureau of Competition. "These types of agreements have the potential to cost consumers hundreds of millions of dollars each year."

Aventis, however, says the agreement reached with Andrx was within the law. "We are confident that we did not violate any laws in the manner in which we negotiated the stipulation or otherwise handled our dispute with Andrx," stated Jerry Belle, president of Aventis Pharmaceuticals North America. "We look forward to the expeditious and full resolution of this matter before the administrative law judge."

Abbott and Geneva settle

Though the Aventis case had yet to be decided at press time, Abbott and Geneva were able to reach a settlement with the FTC. "This agreement with the FTC allows us to resolve this matter quickly and put it behind us," said Jose M. de Lasa, senior vice president, secretary and general counsel for Abbott. "We continue to believe our agreement with Geneva was in accordance with all laws."

Under the terms of the agreement, Abbott, when it is the new drug application holder, agreed to refrain from making agreements with abbreviated new drug application first filers that would restrict their rights with respect to market exclusivity. Under the same circumstances, Abbott also agreed to refrain from reaching agreements that prohibit the sale of drugs that are included within the ANDA and are not the subject of patent infringement actions. In addition, Abbott agreed it would not enter into an agreement that restricts an infringer from entering the market during litigation, unless the parties petition the court, provide notice to the FTC and are granted a stipulated preliminary injunction.

The two cases may set a precedent for how the FTC examines agreements between brand name and generic pharmaceutical manufacturers. Said members of the commission in a statement: "Pharmaceutical firms should now be on notice, however, that arrangements comparable to those addressed in the present consent orders can raise serious antitrust issues, with a potential for serious consumer harm. Accordingly, in the future, the Commission will consider its entire range of remedies in connection with enforcement actions against such arrangements, including possibly seeking disgorgement of illegally obtained profits." PR