IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

Case no.: 2:08-cv-2431 

In re: WELLBUTRIN XL ANTITRUST 

LITIGATION 

This Document Relates To: 

Case no.: 2:08-cv-2433 

All Actions NOTICE OF MOTION FOR 

LEAVE TO FILE BRIEF AS 

AMICUS CURIAE 

PLEASE TAKE NOTICE that the Federal Trade Commission will move before the 

Honorable Mary A. McLaughlin, U.S.D.J., on September 26, 2013, for an Order granting leave 

to file a brief as amicus curiae. 

 PLEASE TAKE FURTHER NOTICE that in support of the motion, the Federal Trade 

Commission will rely on the attached memorandum of law. A proposed order has also been 

submitted with this motion. 

Dated: September 26, 2013 

Respectfully submitted, 

 /s/ Markus H. Meier 

DEBORAH L. FEINSTEIN MARKUS H. MEIER 

Director BRADLEY S. ALBERT 

Bureau of Competition ELIZABETH R. HILDER 

 JAMES E. RHILINGER 

Attorneys for Amicus Curiae

 Federal Trade Commission 

JONATHAN E. NUECHTERLEIN 600 Pennsylvania Avenue N.W. 

General Counsel Washington, D.C. 20580 

Federal Trade Commission Telephone: (202) 326-3759 

 Facsimile: (202) 326-3384 

 mmeier@ftc.gov

 

Case 2:08-cv-02431-MAM Document 510 Filed 09/26/13 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

Case no.: 2:08-cv-2431 

In re: WELLBUTRIN XL ANTITRUST 

LITIGATION 

This Document Relates To: 

Case no.: 2:08-cv-2433 

All Actions 

 

FEDERAL TRADE COMMISSION’S MOTION FOR LEAVE 

TO FILE AMICUS CURIAE BRIEF 

DEBORAH L. FEINSTEIN MARKUS H. MEIER 

Director BRADLEY S. ALBERT 

Bureau of Competition ELIZABETH R. HILDER 

 JAMES E. RHILINGER 

 Attorneys for Amicus Curiae

 Federal Trade Commission 

 600 Pennsylvania Avenue N.W. 

 Washington, D.C. 20580 

JONATHAN E. NUECHTERLEIN Telephone: (202) 326-3759 

General Counsel Facsimile: (202) 326-3384 

Federal Trade Commission mmeier@ftc.gov 

 

 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 1 of 9
i 

Table of Contents 

I. District Courts Have Broad Discretion to Appoint Amicus Curiae .................................... 2

II. This Court Should Exercise Its Discretion to Accept the FTC’s Amicus Brief .................. 3

Conclusion ...................................................................................................................................... 6

 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 2 of 9
ii 

Table of Authorities 

Cases

Avellino v. Herron, 991 F. Supp. 730 (E.D.Pa. 1998) ................................................................... 2 

Clark v. Actavis Group HF, 567 F. Supp. 2d 711 (D.N.J. 2008) .................................................... 3 

FTC v. Actavis, Inc. 133 S.Ct. 2223 (2013) .................................................................................... 1 

In re Effexor XR Antitrust Litig., No. 11-cv-5479 (D.N.J. Sept. 12, 2013) .................................... 4 

Liberty Res., Inc. v. Phila. Hous. Auth., 395 F. Supp. 2d 206 (E.D.Pa. 2005) ............................... 3 

Neonatology Assocs., P.A. v. Comm’r, 293 F.3d 128 (3d Cir. 2002) ............................................. 3 

Sciotto v. Marple Newtown Sch. Dist., 70 F. Supp. 2d 553 (E.D.Pa. 1999) ................................... 2 

United States v. Alkaabi, 223 F. Supp. 2d 583 (D.N.J. 2002) ........................................................ 2 

Waste Mgmt. of Pa., Inc. v. City of York, 162 F.R.D. 34 (M.D.Pa. 1995) ...................................... 5 

Statutes

15 U.S.C. §§ 41-58 ......................................................................................................................... 1 

FED. R. APP. P. 29 ....................................................................................................................... 2, 3 

Other Authorities

FTC BUREAU OF COMPETITION, Agreements Filed with the Federal Trade Commission under the 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003: Overview of 

Agreements Filed in FY 2012 (2013) ......................................................................................... 4 

Michael K. Lowman, Comment, The Litigating Amicus Curiae: When Does the Party Begin 

After the Friends Leave?, 41 AM. U. L. REV. 1243 (1992) ......................................................... 2 

Court Documents

First Amended Complaint, FTC v. Cephalon, Inc., No. 08-2141 (E.D.Pa. Aug. 12, 2009) ........... 1 

Order, In re Wellbutrin XL Antitrust Litig., No. 08-2431, Doc. No. 464 (E.D.Pa. July 17, 2012) . 1 

Order, In re Wellbutrin XL Antitrust Litig., No. 08-2431, Doc. No. 506 (E.D.Pa. July 11, 2013) . 1 

Order, In re Wellbutrin XL Antitrust Litig., No. 08-2431, Doc. No. 509 (E.D.Pa. Aug. 28, 2013) 5 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 3 of 9
The Federal Trade Commission respectfully moves for leave to file an amicus curiae

brief in the above-captioned matter in connection with the Court’s request for “briefing on the 

question of whether Actavis applies to the patent settlement agreements at issue in this 

litigation.”1

 In addition, the Commission proposes to address the Court’s earlier request for 

information with respect to the process for government review of pharmaceutical patent 

settlement agreements.2

 Defendant’s brief raises the issue whether a branded company’s commitment not to 

launch an authorized generic in competition with the first generic applicant (a “no-authorizedgeneric commitment”) can have the “potential for genuine adverse effects on competition” and 

can be a “reverse payment” in a patent settlement agreement. FTC v. Actavis, Inc., 133 S. Ct. 

2223, 2234 (2013) (quoting FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 460 (1986)). 

 The FTC seeks leave to submit a brief as amicus curiae to assist the Court in its analysis 

of the antitrust implications of no-authorized-generic commitments, such as the one at issue in 

this case, and to clarify the Commission’s role in the review of pharmaceutical patent 

settlements. The FTC is an independent agency charged by Congress with protecting the interests 

of consumers by enforcing competition and consumer protection laws.3

 It exercises primary 

responsibility over federal antitrust enforcement in the pharmaceutical industry, including 

antitrust challenges to Hatch-Waxman settlements.4

 In addition to its role as a law enforcement 

agency, the FTC has a congressionally mandated role to conduct studies of industry-wide 

 

1

 Order, In re Wellbutrin XL Antitrust Litig., No. 08-cv-2431 (E.D. Pa. July 11, 2013). 

2

 Order, In re Wellbutrin XL Antitrust Litig., No. 08-cv-2431 (E.D. Pa. July 17, 2012). 

3

 15 U.S.C. §§ 41-58. 

4 See, e.g., First Amended Complaint, FTC v. Cephalon, Inc., No. 08-cv-2141 (E.D. Pa. Aug. 12, 

2009). 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 4 of 9
2 

competition issues. The FTC has conducted numerous studies relating to pharmaceutical patent 

settlements, including one resulting in a detailed 270-page report on authorized generics. 

 The plaintiffs have consented to the FTC’s filing of an amicus brief. The defendants do 

not consent. 

I. District Courts Have Broad Discretion to Appoint Amicus Curiae

“District courts have broad discretion to appoint amicus curiae.” Sciotto v. Marple 

Newtown Sch. Dist., 70 F. Supp. 2d 553, 554 (E.D. Pa. 1999) (quoting Liberty Lincoln Mercury, 

Inc. v. Ford Mktg. Corp., 149 F.R.D. 65, 82 (D.N.J. 1993)); see also Avellino v. Herron, 991 F. 

Supp. 730, 732 (E.D.Pa. 1998). “Although there is no rule governing the appearance of an 

amicus curiae in the United States District Courts,” United States v. Alkaabi, 223 F. Supp. 2d 

583, 592 (D.N.J. 2002), some district courts in the Third Circuit have looked to the Federal Rules 

of Appellate Procedure for guidance in exercising their broad discretion. See, e.g., id. (citation 

omitted). Rule 29 distinguishes between amicus briefs filed by federal government agencies and 

those filed by private parties. Amicus briefs from federal agencies are accepted by Courts of 

Appeal as a matter of right, see FED. R. APP. P. 29(a), and have been accepted by some district 

courts solely on this basis. See, e.g., Clark v. Actavis Group HF, 567 F. Supp. 2d 711, 718 n.11 

(D.N.J. 2008) (amicus brief filed by U.S. Department of Justice). Amici from federal agencies 

offer a distinctive perspective because “governmental bodies, acting as amicus curiae, possess 

unparalleled institutional expertise and constitute a valuable means of determining how the 

court’s decision may affect the world outside its chambers.”5

 In contrast, for private amici, Rule 

29 requires that, unless all parties consent to its filing, the amicus curiae obtain leave of the court 

after showing that its brief is timely and expresses an interest relevant to the disposition of the 

 

5

 Michael K. Lowman, Comment, The Litigating Amicus Curiae: When Does the Party Begin 

After the Friends Leave?, 41 AM. U. L. REV. 1243, 1261-62 (1992). 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 5 of 9
3 

case. FED. R. APP. P. 29 (a), (b), and (e); see also Neonatology Assocs., P.A. v. Comm’r, 293 F.3d 

128, 130-31 (3d Cir. 2002). 

Some district courts in this Circuit have applied a four-part standard that incorporates 

principles similar to Rule 29 as well as other factors, including one considering the partiality of 

the would-be amicus. See, e.g., Liberty Res., Inc. v. Phila. Hous. Auth., 395 F. Supp. 2d 206, 209 

(E.D. Pa. 2005) (citing Sciotto v. Marple Newtown Sch. Dist., 70 F. Supp. 2d 553, 555 (E.D. Pa. 

1999)). These courts grant leave to participate as amicus curiae when: “(1) the petitioner has a 

‘special interest’ in the particular case; (2) the petitioner’s interest is not represented competently 

or at all in the case; (3) the proffered information is timely and useful; and (4) the petitioner is 

not partial to a particular outcome in the case.” See, e.g., Liberty Res., 394 F. Supp. 2d at 209. 

II. This Court Should Exercise Its Discretion to Accept the FTC’s Amicus Brief 

This Court should exercise its discretion to accept the FTC’s amicus brief because the 

brief (1) expresses both public and governmental interests not currently before the Court, (2) is 

not partial to any specific outcome in the case, and (3) proffers useful information in a timely 

manner. Another court in this Circuit recently approved the FTC’s participation as amicus curiae

in a similar case. See Order, In re Effexor XR Antitrust Litig., No. 11-cv-5479 (D.N.J. Sept. 12, 

2013) (granting FTC’s motion for leave to file amicus brief and finding that the FTC “possesses 

institutional expertise which may prove useful to the Court’s deliberations”). 

 First, the FTC is a federal agency representing public interests not currently before this 

Court. As outlined in the FTC’s amicus brief, the antitrust treatment of no-authorized-generic 

commitments has serious long-term implications for all consumers, not just the private parties in 

this matter. Settling parties are using no-authorized-generic commitments with increasing 

frequency. In the FTC’s most recent annual summary of brand-generic settlement agreements, 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 6 of 9
4 

no-authorized-generic commitments were included in almost half of the settlements (19 of 40) 

with payment to the generic drug company and restrictions on generic entry.6 The treatment of 

no-authorized-generic commitments therefore has important public policy implications. 

 Moreover, as an agency charged by Congress with enforcing competition laws, and the 

primary federal enforcer responsible for antitrust challenges to Hatch-Waxman patent 

settlements, the FTC has a special interest in the interpretation of these laws. District courts 

consider these interests when granting motions for leave to federal agencies to participate as 

amicus curiae. See, e.g., Waste Mgmt. of Pa., Inc. v. City of York, 162 F.R.D. 34, 37 (M.D. Pa. 

1995) (stating as a basis for accepting an amicus brief that “the EPA has a special interest in this 

litigation as it is the primary body responsible for administering and enforcing” the relevant law). 

The Court’s ruling and its interpretation of Actavis could affect potential FTC enforcement 

actions. 

 Second, while the FTC has an interest in the development of the law concerning noauthorized-generic commitments, it takes no position with regard to the ultimate outcome in this 

case. Concluding at this stage that Actavis applies to a case such as this one, involving a noauthorized-generic commitment, is not determinative of the outcome of this—or any—case. As 

the Supreme Court observed in Actavis, the plaintiffs still must prove their case under the rule of 

reason. 

 Third, the brief provides useful information based on the FTC’s extensive empirical 

studies of pharmaceutical patent settlements (particularly those involving no-authorized-generic 

commitments), and experience reviewing pharmaceutical settlements filed under the Medicare 

 

6 See FTC BUREAU OF COMPETITION, AGREEMENTS FILED WITH THE FEDERAL TRADE 

COMMISSION UNDER THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION 

ACT OF 2003: OVERVIEW OF AGREEMENTS FILED IN FY 2012 1 (2013), available at

http://www.ftc.gov/os/2013/01/130117mmareport.pdf. 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 7 of 9
5 

Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), in a timely manner. 

As described in the amicus brief, the FTC has a unique institutional perspective—based on years 

of study and empirical analysis—to offer the Court in its analysis of the competitive implications 

of no-authorized-generic commitments and the functioning of the review process for 

pharmaceutical patent settlements. Unlike the plaintiffs, the FTC has reviewed hundreds of 

patent settlement agreements, most of which are non-public, and is in the singular position to 

discuss the review process, the potential antitrust concerns of those settlements, and the possible 

implications for consumers. The amicus brief presents the FTC’s findings and experience 

relevant to the questions posed by the Court in a manner that is more accessible than merely 

reading a collection of reports. Finally, the FTC’s brief is timely because it is filed on the same 

day that briefs are due from the plaintiffs in this case. See Order, In re Wellbutrin XL Antitrust 

Litigation, No. 08-cv-2431 (E.D. Pa. Aug. 28, 2013). 

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 8 of 9
6 

Conclusion 

 For the foregoing reasons, the Commission respectfully requests that the Court grant 

leave to file an amicus curiae brief. 

Dated: September 26, 2013 Respectfully submitted, 

 /s/ Markus H. Meier 

DEBORAH L. FEINSTEIN MARKUS H. MEIER 

Director BRADLEY S. ALBERT 

Bureau of Competition ELIZABETH R. HILDER 

 JAMES E. RHILINGER 

 Attorneys for Amicus Curiae

 Federal Trade Commission 

 600 Pennsylvania Avenue N.W. 

 Washington, D.C. 20580 

JONATHAN E. NUECHTERLEIN Telephone: (202) 326-3364 

General Counsel Facsimile: (202) 326-3384 

Federal Trade Commission mmeier@ftc.gov

Case 2:08-cv-02431-MAM Document 510-1 Filed 09/26/13 Page 9 of 9
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

Case no.: 2:08-cv-2431 

In re: WELLBUTRIN XL ANTITRUST 

LITIGATION 

This Document Relates To: 

Case no.: 2:08-cv-2433 

All Actions 

 

FEDERAL TRADE COMMISSION’S BRIEF AS AMICUS CURIAE 

DEBORAH L. FEINSTEIN MARKUS H. MEIER 

Director BRADLEY S. ALBERT 

Bureau of Competition ELIZABETH R. HILDER 

 JAMES E. RHILINGER 

 Attorneys for Amicus Curiae

 Federal Trade Commission 

 600 Pennsylvania Avenue N.W. 

 Washington, D.C. 20580 

JONATHAN E. NUECHTERLEIN Telephone: (202) 326-3759 

General Counsel Facsimile: (202) 326-3384 

Federal Trade Commission mmeier@ftc.gov 

 

 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 1 of 22
i 

Table of Contents 

Interest of the Federal Trade Commission ...................................................................................... 2

I. FTC v. Actavis Reaffirms Application of Traditional Antitrust Principles to 

Agreements Between a Patentee and Its Potential Competitor ........................................... 4

A. The key defining characteristic of a reverse payment under Actavis is that it 

enables parties to share monopoly profits preserved by avoiding competition .............. 4

B. Actavis rejects the proposition that pharmaceutical patent settlements are 

generally immune from antitrust scrutiny ....................................................................... 7

II. There Is Substantial Evidence on the Economic Effects of a No-AuthorizedGeneric Commitment to the First Generic Applicant ......................................................... 8

A. Regulatory context for authorized generics .................................................................... 9

B. Typically, the brand’s authorized generic competes with the first filer for generic 

sales during the 180-day exclusivity, resulting in lower generic drug prices ................. 9

C. With a no-authorized-generic commitment, the brand company forgoes revenues, 

the generic company gets 100 percent of generic sales, and consumers pay higher 

prices ............................................................................................................................. 11

III. The No-Authorized-Generic Commitment Presents the Same Antitrust Concern as 

the Reverse Payments the Supreme Court Considered in Actavis .................................... 12

IV. Exclusive Patent Licenses Are Not Immune from Antitrust Scrutiny .............................. 13

V. FTC Review of Settlements Under the Medicare Modernization Act .............................. 15

Conclusion .................................................................................................................................... 17

 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 2 of 22
ii 

Table of Authorities 

Cases

American Needle, Inc. v. National Football League, 130 S.Ct. 2201(2010) ................................ 10 

Benger Labs. Ltd. v. R. K. Laros Co., 209 F. Supp. 639 (E.D. Pa. 1962) ..................................... 17 

Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670 (2012) ..................................... 3 

Eastman Kodak Co. v. Image Technical Servs., 504 U.S. 451(1992) .......................................... 10 

FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013) ......................................................................... passim 

FTC v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003 (2013) ................................................ 18 

Genentech, Inc. v Eli Lilly & Co., 998 F.2d 931 (Fed Cir. 1993) ................................................. 17 

General Talking Pictures Corp v. Western Electric, 304 U.S. 175 (1938) .................................. 17 

Granholm v. Heald, 544 U.S. 460 (2005) ....................................................................................... 3 

In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514 (E.D.N.Y. 2005) ........ 17 

In re K-Dur Antitrust Litig., 686 F.3d 197 (3d Cir. 2012) .............................................................. 6 

In re Lamictal Antitrust Litig., 2012 WL 6725580 (D.N.J. Dec. 6, 2012) ..................................... 6 

In re Lipitor Antitrust Litig., 2013 WL 4780496 (D.N.J. Sept. 5, 2013) ........................................ 6 

In re Nexium (Esomeprazole) Antitrust Litig., 2013 WL 4832176 (D. Mass. Sept. 11, 2013) ...... 6 

Mylan Inc. v. SmithKline Beecham Corp., 723 F.3d 413 (3d Cir. 2013) ...................................... 21 

N. Sec. Co. v. United States, 193 U.S. 197 (1904) ........................................................................ 18 

Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358 (3d. Cir. 1996) .............................................. 17 

Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005) ................................................... 3 

Teva Pharm. Indus. v. Crawford, 410 F.3d 51 (D.C. Cir. 2005) .................................................. 11 

United States v. New Wrinkle, Inc., 342 U.S. 371 (1952) ............................................................. 10 

Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748 (1976) ............ 3 

Statutes

15 U.S.C. § 46(b) ............................................................................................................................ 3 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 3 of 22
iii 

15 U.S.C. §§ 41–58 ......................................................................................................................... 2 

21 U.S.C. § 355 ............................................................................................................. 9, 13, 15, 16 

Other Authorities

12 P. AREEDA & H. HOVENKAMP, ANTITRUST LAW (3d ed. 2012) ............................................... 13 

Comment of Apotex Corp. in Supp. of Citizen Pet. of Mylan Pharms., Inc., No. 2004P0075/CP1 (F.D.A. Mar. 24, 2004) ............................................................................................ 10 

Drug Topics, Top 200 Brand Drugs by Retail Dollars in 2002 (Apr. 7, 2003) ............................ 11 

Frequently Asked Questions About Filing Agreements with the FTC Pursuant to the Medicare 

Prescription Drug, Improvement, and Modernization Act of 2003 .......................................... 16 

FTC Bureau of Competition, Competition in the Health Care Marketplace (last updated 

Apr. 10, 2013) ..................................................................................................................... 13, 16 

FTC, AUTHORIZED GENERIC DRUGS: SHORT-TERM EFFECTS AND LONG-TERM IMPACT (2011)

 ........................................................................................................................................... passim 

Michael A. Carrier, Solving the Drug Settlement Problem: The Legislative Approach, 41 

RUTGERS L.J. 83 (2009) .............................................................................................................. 5 

Press Release, Teva Announces Launch of Generic Wellbutrin XL Tablets, 150mg (May 30, 

2008) ......................................................................................................................................... 11 

U.S. Department of Justice and Federal Trade Commission, Antitrust Guidelines for the 

Licensing of Intellectual Property (Apr. 6, 1995) ................................................................. 8, 13 

Court Documents

GSK’s Memorandum of Law Regarding the Applicability of FTC v. Actavis 

(filed Aug. 5, 2013) ..................................................................................................... 6, 7, 13, 14 

Order, In re Wellbutrin XL Antitrust Litig., Docket No. 464 (July 17, 2012) .............................. 15 

Reply Brief for the Petitioner, FTC v. Actavis, 133 S. Ct. 2223 (2013) ......................................... 6 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 4 of 22
In FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), the Supreme Court held that antitrust 

concerns may arise when, in exchange for the settlement of patent litigation, a brand-name drug 

manufacturer pays a generic drug manufacturer to defer generic competition. The Court rejected 

a legal rule that conferred “near-automatic antitrust immunity” on patent settlements when the 

alleged anticompetitive restraints do not extend beyond the patent’s expiration date. Id. at 2237. 

Instead, the Court reaffirmed that the legality of an agreement not to compete between a patent 

holder and a would-be rival is to be assessed using “traditional antitrust factors.” Id. at 2231. 

In this case the plaintiffs contend that, in lieu of cash, the patentee used a promise not to 

compete with an “authorized generic” version of the patented drug (the “no-authorized-generic 

commitment”) to induce the first generic applicant to settle an infringement suit and delay selling 

a generic alternative. Such deals can be a win-win for both firms: first, they can enable the 

brand-name drug manufacturer to forestall the date of generic entry and thus extend its 

enjoyment of monopoly profits; second, they can benefit the generic challenger by eliminating 

the only competition for sales of its generic drug product for a significant period of time—thus 

creating the prospect of many millions of dollars in extra revenue for the generic company, in 

part from its ability to charge supracompetitive prices for its product. 

Despite the potential for this type of settlement to cause substantial harm to consumers, 

both before and after generic entry, GlaxoSmithKline (GSK) contends that Actavis renders such 

an arrangement immune from antitrust challenge because the patentee paid the generic through a 

non-compete agreement instead of with cash. According to GSK, this Court must dismiss this 

antitrust challenge without considering whether such a no-authorized-generic commitment could 

have functioned like the cash payments at issue in Actavis. GSK also asserts that the challenged 

agreement is lawful because it took the form of an exclusive license. 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 5 of 22
2 

GSK’s arguments make neither economic nor legal sense. The type of no-authorizedgeneric commitment at issue here raises the same type of antitrust concern that the Supreme 

Court identified in Actavis. Indeed, accepting GSK’s claim of antitrust immunity whenever 

patentees use vehicles other than cash to share the profits from an agreement to avoid 

competition elevates form over substance, and it would allow drug companies to easily 

circumvent the ruling in Actavis, at great cost to consumers. 

As the federal agency with primary responsibility for protecting consumers through 

antitrust enforcement in the pharmaceutical industry, as well as with expertise on the economic 

effects of competition by authorized generics, the FTC requests leave to file this amicus brief to 

address how the antitrust concerns the Supreme Court identified in Actavis regarding reverse 

payments can be raised by the type of no-authorized-generic commitment alleged in this case.1

 In 

addition, in light of this Court’s previous request that the parties provide additional information 

about the procedures applicable to government review of patent settlement agreements between 

brand-name and generic drug companies, this brief also explains that process. 

Interest of the Federal Trade Commission 

 The Federal Trade Commission is an independent agency charged by Congress with 

protecting the interests of consumers by enforcing competition and consumer protection laws. 15 

U.S.C. §§ 41–58. It exercises primary responsibility over federal antitrust enforcement in the 

pharmaceutical industry. The Commission has used its law enforcement authority to challenge 

 

1

 The FTC expresses no views on the ultimate disposition of this litigation. 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 6 of 22
3 

Hatch-Waxman patent settlements involving payments to delay entry by a lower-priced generic 

drug (“reverse-payment” or “pay-for-delay” agreements).2

 In addition, the FTC has a congressionally mandated role to conduct studies of industrywide competition issues. The agency’s broad authority to compel the production of data and 

information, 15 U.S.C. § 46(b), gives it a unique capacity to conduct “systematic, institutional 

study of real-world industries and activities” that “modern academic research in industrial 

organization rarely undertakes.”3 Courts, including the Supreme Court, have relied on FTC 

studies when resolving legal and policy issues.4 The Commission has conducted a variety of 

empirical studies of the pharmaceutical industry, including a comprehensive empirical study of 

the competitive effects of authorized generics.5 The FTC’s 2011 Authorized Generic Report is 

based on an analysis of business documents from more than one hundred brand and generic 

pharmaceutical companies. 

 

2 See, e.g., FTC v. Actavis, 133 S. Ct. 2223 (2013); Schering-Plough Corp. v. FTC, 402 F.3d 

1056 (11th Cir. 2005); First Amended Complaint, FTC v. Cephalon, Inc., No. 08-cv-2141 (E.D. 

Pa. Aug. 12, 2009). 

3 Report of the American Bar Association Section of Antitrust Law, Special Committee to Study 

the Role of the Federal Trade Commission, 58 ANTITRUST L.J. 43, 103 (1989). 

4 See, e.g., Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 1678 (2012) (FTC 

study on generic pharmaceuticals); Granholm v. Heald, 544 U.S. 460, 466–68, 490–92 (2005) 

(FTC study of Internet wine sales); Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, 

Inc., 425 U.S. 748, 754 n.11, 765 n.20 (1976) (FTC study concerning drug price advertising 

restrictions). 

5

 FTC, AUTHORIZED GENERIC DRUGS: SHORT-TERM EFFECTS AND LONG-TERM IMPACT (2011), 

available at http://www.ftc.gov/os/2011/08/ 2011genericdrugreport.pdf [hereinafter Authorized 

Generic Report]. 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 7 of 22
4 

Argument 

I. FTC v. Actavis Reaffirms Application of Traditional Antitrust Principles to 

Agreements Between a Patentee and Its Potential Competitor 

In Actavis, the Supreme Court held that “reverse-payment” patent settlements—

agreements in which a brand-name drug manufacturer pays a would-be competitor to abandon its 

patent challenge and agree not to sell its generic drug product for a period of time—are not 

immune from antitrust scrutiny and are to be evaluated under the traditional antitrust “rule of 

reason.” The Eleventh Circuit had affirmed dismissal of an FTC complaint alleging that the 

manufacturer of the testosterone replacement drug AndroGel had entered into two such 

agreements. The Eleventh Circuit did so on the ground that an agreement is “immune from 

antitrust attack” if its anticompetitive effects are all within “the scope of the exclusionary 

potential of the patent.” Actavis, 133 S. Ct. at 2227 (quoting FTC v. Watson Pharms., Inc., 677 

F.3d 1298, 1312 (11th Cir. 2012). The Supreme Court reversed, rejecting this so-called “scopeof-the-patent” approach. Id. at 2230 (“[W]e do not agree that that fact, or characterization, can 

immunize the agreement from antitrust attack.”). The Court explained that its longstanding 

approach to assessing agreements between a patentee and potential competitors considers 

“traditional antitrust factors such as likely anticompetitive effects, redeeming virtues, market 

power, and potentially offsetting legal considerations present in the circumstances, such as here 

those related to patents.” Id. at 2231. 

A. The key defining characteristic of a reverse payment under Actavis is that it 

enables parties to share monopoly profits preserved by avoiding competition 

In Actavis, the Supreme Court described the nature of the antitrust concern that reversepayment settlements can present. “[P]ayment in return for staying out of the market,” the Court 

explained, “simply keeps prices at patentee-set levels . . . while dividing that [monopoly] return 

between the challenged patentee and the patent challenger.” 133 U.S. at 2234-35. “[T]he 

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5 

payment’s objective is to maintain supracompetitive prices to be shared among the patentee and 

the challenger rather than face what might have been a competitive market.” Id. at 2236.6

 

GSK contends that this antitrust concern can arise only if parties use a monetary payment 

to share the supracompetitive returns preserved by their agreement to avoid competition. To be 

sure, the Supreme Court’s opinion speaks in terms of “payments” and “money,” as those were 

the allegations in Actavis. But nothing in the opinion suggests that the Court meant to limit its 

ruling to payments in cash, and the only two courts to have addressed the issue rejected 

arguments that Actavis applies only to monetary payments.7 Such an artificial limitation would 

make no economic sense. The rule GSK proposes would allow settling parties to sidestep an 

antitrust challenge to a reverse-payment settlement simply by transferring other valuable assets, 

such as gold bullion, stocks, or real estate.8

 

6 See also id. at 2235 (payment may show “that the patentee seeks to induce the generic 

challenger to abandon its claim with a share of its monopoly profits that would otherwise be lost 

in the competitive market”); id. at 2236 (noting “concern that a patentee is using its monopoly 

profits to avoid the risk of patent invalidation or a finding of noninfringement”). 

7 In re Nexium (Esomeprazole) Antitrust Litig., 2013 WL 4832176, at *15 (D. Mass. Sept. 11, 

2013) (“This Court does not see fit to read into the [Actavis] opinion a strict limitation of its 

principles to monetary-based arrangements alone.”); In re Lipitor Antitrust Litig., 2013 WL 

4780496, at *26 (D.N.J. Sept. 5, 2013) (“[N]othing in Actavis strictly requires that the payment 

be in the form of money”). A pre-Actavis ruling in In re Lamictal Antitrust Litig., 2012 WL 

6725580 (D.N.J. Dec. 6, 2012), interpreted the Third Circuit’s rule on reverse payments as 

limited to cash payments, but the Third Circuit decision upon which it was based has since been 

vacated in light of Actavis. In re K-Dur Antitrust Litig., 686 F.3d 197 (3d Cir. 2012), vacated by

133 S. Ct. 2849 (2013). 

8

 Indeed, commentators have noted that after the FTC began challenging cash-only reversepayment agreements, pharmaceutical companies then turned to other payment arrangements. See, 

e.g., Michael A. Carrier, Solving the Drug Settlement Problem: The Legislative Approach, 41 

RUTGERS L.J. 83, 98 (2009) (“[B]rand firms no longer are making simple payments to generics 

to stay off the market. Such settlements, which appear quaint in contrast to today’s sophisticated 

version of three-drug monte, are no longer observed in today’s marketplace. Instead, a brand’s 

promise not to introduce an authorized generic, accompanied by an ANDA generic’s agreement 

to delay entering the market, could allow the brand to reap millions of dollars in additional 

profits while also benefitting the ANDA generic. At the same time, such a payment is more 

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6 

It is also incorrect to suggest, as GSK does, that the only alternative to equating 

“payment” with cash is to treat all types of consideration to the alleged infringer as a payment.9

In Actavis, the Supreme Court distinguished among types of consideration. It contrasted the core 

competitive concern of settlements that share monopoly profits with settlements in which the 

opposing parties merely agree to compromise on matters at stake in the litigation (such as a party 

accepting less than the full amount of its damage claim). Id. at 2233. Such a compromise of 

claims, the Court noted, has not been thought to raise antitrust concerns. For example, when the 

parties in Hatch-Waxman patent litigation settle with an agreement that merely sets a date for the 

generic patent challenger’s market entry before patent expiration, without more, there is nothing 

to suggest that this familiar settlement form reflects anything other than arms-length bargaining 

between adverse parties based on expectations regarding the likely outcome of the litigation. 

But when the inducement to settle and defer market entry includes something that the 

alleged infringer could not get even if it prevailed in the patent litigation, “that . . . is something 

quite different” and may raise antitrust concerns. Id. Under those circumstances, it is necessary 

to ask whether the inducement may be a vehicle for sharing monopoly profits. Actavis thus 

reflects a two-part framework to assess whether a settlement agreement contains a reverse 

payment: (1) Is the alleged payment something that a generic challenger could not have obtained 

had it won the litigation? and (2) Are the parties sharing monopoly profits preserved by avoiding 

competition?10

 

difficult to quantify and appears less suspicious to an antitrust court that is trained to look for 

monetary payments.”).

9 See GSK’s Memorandum of Law Regarding the Applicability of FTC v. Actavis (filed Aug. 5, 

2013) (GSK Mem.), at 14. 

10 The Supreme Court’s analysis reflects the principles the FTC’s brief articulated. See Reply 

Brief for the Petitioner at 9-10, FTC v. Actavis, 133 S. Ct. 2223 (2013) (No. 12-416), available at

http://www.ftc.gov/os/caselist/0710060/130318actavisreplybrief.pdf (“[T]he defining 

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7 

B. Actavis rejects the proposition that pharmaceutical patent settlements are 

generally immune from antitrust scrutiny 

The Supreme Court’s rejection of an antitrust immunity premised on the “scope-of-thepatent” approach was unequivocal. A court cannot “answer the antitrust question” merely by 

looking at “what the holder of a valid patent could do.” Id. at 2230-31. The Court reviewed its 

precedents and explained that in none of these cases—which addressed a wide variety of 

restraints arising in patent-related settlement agreements and patent licenses—did it simply 

“measure the length or amount of a restriction solely against the length of the patent’s term or its 

earning potential.” Id. at 2231. Instead, those prior decisions “seek to accommodate patent and 

antitrust policies, finding challenged terms and conditions unlawful unless patent law policy 

offsets the antitrust law policy strongly favoring competition.” Id. at 2233. It is therefore 

incorrect to suggest, as GSK does, that Actavis merely created a narrow exception to an 

otherwise blanket antitrust immunity for drug patent settlements that permit entry before patent 

expiration.11 

The Supreme Court’s rejection of the scope-of-the-patent test and its directive to consider 

traditional antitrust factors is not a special rule limited to “reverse payment” cases. As the Court 

 

characteristics of a reverse payment are that it (1) is consideration from the patentee that the 

accused infringer could not obtain by prevailing in the litigation and (2) allows the patentee to 

co-opt its rival by sharing monopoly profits. . . . [A reverse payment includes] non-cash 

consideration if—but only if—these characteristics are present.”). 

11 GSK argues that the Supreme Court foreclosed any antitrust scrutiny of settlements not 

involving cash payments when it observed that drug companies “may, as in other industries, 

settle in other ways, for example, by allowing the generic manufacturer to enter the patentee's 

market prior to the patent's expiration, without the patentee paying the challenger to stay out 

prior to that point.” GSK Mem. at 8, 11 (quoting Actavis, 133 S. Ct at 2237). But this sentence 

does not show that “payment” can only mean cash. The Supreme Court did not purport to be 

conferring immunity on settlements using non-cash forms of payment. In fact, the quoted 

language merely reflects that entry-date-only settlements do not ordinarily raise antitrust 

concerns. As noted above, without more, there is nothing to suggest that this familiar settlement 

form reflects anything other than arms-length bargaining between adverse parties based on their 

expectations about the likely outcome of the litigation. 

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8 

emphasized, it is the approach that applies generally to antitrust cases challenging “patent-related 

settlement agreements” and “overly restrictive patent licensing agreements.”12 Id. at 2231-34. 

Indeed, the Actavis decision discusses prior cases in which agreements that provided for entry 

before patent expiration and involved no cash payment to the allegedly infringing licensee were 

found to violate the Sherman Act. Id. at 2232-33. That is because there was some other aspect of 

the agreement that raised antitrust concerns.13 The Actavis decision thus reaffirms the need to 

focus on economic substance rather than formalistic distinctions when assessing antitrust 

challenges to patent settlements.14

II. There Is Substantial Evidence on the Economic Effects of a No-Authorized-Generic 

Commitment to the First Generic Applicant 

An authorized generic is a prescription drug that has been approved by the FDA as a 

brand-name drug but is marketed by the brand company or its representative as a generic drug 

product. As discussed in detail below, the FTC’s Authorized Generic Report found that: (1) 

introducing an authorized generic allows the brand company to offset some of the brand-name 

drug sales lost when generic entry occurs; (2) competition from an authorized generic during the 

 

12 The federal enforcement agencies’ 1995 Antitrust Guidelines for the Licensing of Intellectual 

Property reflect this approach. See U.S. Dep’t of Justice and Fed. Trade Comm’n, Antitrust 

Guidelines for the Licensing of Intellectual Property at 7-8 (Apr. 6, 1995). They discuss how 

antitrust analysis applies to a wide variety of restraints that may appear in patent license 

agreements, explaining that traditional antitrust principles take into account the distinctive 

characteristics of intellectual property. 

13 See, e.g., United States v. New Wrinkle, Inc., 342 U.S. 371, 378 (1952) (finding that patent 

licenses granted under a settlement agreement could violate the antitrust laws if they are the 

means by which patent holders jointly regulate distribution and control prices). 

14 The Supreme Court has repeatedly emphasized that antitrust analysis turns on economic 

substance, not form. See, e.g., American Needle, Inc. v. National Football League, 130 S.Ct. 

2201, 2211 (2010) (“[S]ubstance, not form, should determine should determine whether a[n] . . . 

entity is capable of conspiring”), quoting Copperweld Corp. v. Independence Tube Corp., 467 

U.S. 752, 773 n.51 (1984); Eastman Kodak Co. v. Image Technical Servs., 504 U.S. 451, 466-67 

(1992) (in assessing market power, “this Court has examined closely the economic reality of the 

market at issue,” rather than resting on “formalistic distinctions”). 

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9 

first 180 days of generic sales substantially affects the first generic entrant’s revenues and results 

in significantly lower prices for consumers; and (3) a brand’s commitment not to launch an 

authorized generic will substantially increase the first generic’s revenues and also will result in 

higher prices for the generic product. 

A. Regulatory context for authorized generics 

 Through enactment of the Hatch-Waxman Act, Congress established the regulatory 

framework under which a generic drug manufacturer may obtain approval of its product from the 

Food and Drug Administration. To encourage generic entry as soon as warranted, the Act 

establishes certain rights and procedures that apply when a company seeks FDA approval to 

market a generic product before expiration of the patent(s) claimed to cover the counterpart 

brand-name drug. In such cases, the generic applicant must certify that the patent in question is 

invalid or not infringed by the generic product, known as a “Paragraph IV” certification. The 

Hatch-Waxman Act awards the first generic company to file an application with a Paragraph IV 

certification (the “first filer”) 180 days of marketing exclusivity, during which the FDA may not 

approve a potential competitor’s generic drug application. 21 U.S.C. § 355(j)(5)(B)(iv). 

Significantly, however, the 180-day marketing exclusivity does not preclude the brand company 

from marketing an authorized generic. See Teva Pharm. Indus. v. Crawford, 410 F.3d 51, 54 

(D.C. Cir. 2005). 

B. Typically, the brand’s authorized generic competes with the first filer for 

generic sales during the 180-day exclusivity, resulting in lower generic drug 

prices 

 Brand companies frequently introduce authorized generics to stem the large losses that 

result from the rapid shift from sales of brand-name drugs to cheaper generic products. See 

Authorized Generic Report, supra note 5, at 12-14, 26-27. Empirical evidence from the FTC’s 

Authorized Generic Report shows that having to compete against an authorized generic during 

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10 

the 180-day exclusivity period has two primary financial effects on the first-filer generic 

company. First, the authorized generic takes a significant share of generic sales away from the 

first filer. Id. at 57-59. Second, and most importantly for consumers, competition between the 

first-filer generic and the authorized generic drives down retail and wholesale generic drug 

prices. Id. at 41-48. The FTC’s Authorized Generic Report found that average wholesale prices 

are 70 percent of the pre-entry brand-name drug price when the first filer faces an authorized 

generic compared to 80 percent of the brand price when it does not. Id. at iii. Because of these 

two effects, “the presence of authorized generic competition reduces the first filer generic’s 

revenues [during the 180-day exclusivity period] by 40 to 52 percent, on average.” Id.; see also 

id. at 33.15

 The financial impacts of an authorized generic on the first-filer generic are well known in 

the pharmaceutical industry. As one generic drug company put it: “[d]ue to market share and 

pricing erosion at the hands of the authorized player, we estimate that the profits for the ‘pure’ 

generic during the exclusivity period could be reduced by approximately 60% in a typical 

scenario.” Id. at 81. Another generic company, Apotex, estimated that competition from an 

authorized generic version of the antidepressant Paxil reduced its revenues by approximately 

$400 million.16 These examples demonstrate the significant financial effects that a brand 

company’s sale of an authorized generic can have on the first-filer generic. 

 

15 The report notes that the effects of an authorized generic continue well after first-filer 

exclusivity expires, as “[r]evenues of the first-filer generic manufacturer in the 30 months 

following exclusivity are between 53 percent and 62 percent lower when facing an [authorized 

generic].” Id. at iii. 

16 Comment of Apotex Corp. in Supp. of Citizen Pet. of Mylan Pharms., Inc., at 4, No. 2004P0075/CP1 (F.D.A. Mar. 24, 2004), available at

http://www.fda.gov/ohrms/dockets/dailys/04/apr04/040104/04p-0075-c00001-vol1.pdf (“There 

can be no doubt that the [brand company’s] authorized generic crippled Apotex’ 180-day 

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11 

C. With a no-authorized-generic commitment, the brand company forgoes 

revenues, the generic company gets 100 percent of generic sales, and 

consumers pay higher prices 

When the brand company cedes all generic sales to the first filer by agreeing not to 

introduce an authorized generic, the generic drug company enjoys significantly greater sales and 

at higher prices. The FTC’s study found that, with a no-authorized-generic commitment, on 

average, “the first-filer’s revenue will approximately double” during the 180-day exclusivity 

period, compared to what the first filer would make if it faced authorized generic competition. 

Authorized Generic Report, supra note 5, at vi. For a blockbuster drug like Wellbutrin XL, the 

benefit to the first-filer of a no-authorized-generic commitment could be substantial, potentially 

reach exceeding one hundred million dollars during the exclusivity period alone.17 

The brand-name drug company, as noted, forgoes the revenues it could otherwise make 

by selling an authorized generic. Consumers, meanwhile, are forced to pay supracompetitive 

prices for the first filer’s generic product. See Authorized Generic Report, supra note 5, at 41-48. 

 

exclusivity—it reduced Apotex’ entitlement by two-thirds—to the tune of approximately $400 

million.”). 

17 The FTC lacks data needed to calculate the benefit from the no-authorized-generic 

commitment at issue here, but the experience of Apotex, which faced an authorized generic 

version of the anti-depressant Paxil, may shed some light. Paxil had U.S. sales of $2.31 billion in 

the year before generic entry and, as noted above, Apotex reportedly lost an estimated $400 

million due to competition from the authorized generic. See Drug Topics, Top 200 Brand Drugs 

by Retail Dollars in 2002 (Apr. 7, 2003), http://drugtopics.modernmedicine.com/drugtopics/news/top-200-brand-and-generic-drugs-retail-dollars-2002. Sales of 150mg Wellbutrin 

XL were approximately $930 million in the year prior to generic entry, or roughly 40 percent of 

branded Paxil sales. Press Release, Teva Pharm. Indus. Ltd., Teva Announces Launch of 

Generic Wellbutrin XL Tablets, 150mg (May 30, 2008), available at

http://www.reuters.com/article/2008/05/30/idUS158417+30-May-2008+BW20080530. Thus, the 

estimated loss of $400 million on Paxil could indicate that a no-authorized-generic commitment 

on Wellbutrin XL 150mg would be worth roughly $160 million (40 percent of $400 million). 

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III. The No-Authorized-Generic Commitment Presents the Same Antitrust Concern as 

the Reverse Payments the Supreme Court Considered in Actavis

Applying the two-part framework for reverse payments reflected in Actavis to a noauthorized-generic commitment with the first filer generic is straightforward. First, with such a 

commitment the generic challenger gets something it could not get by prevailing in the patent 

litigation. Even if the generic prevails, the brand-name drug manufacturer still has the right to 

compete through an authorized generic during the first filer’s 180-day exclusivity period. A 

finding of patent invalidity or non-infringement would not limit the patentee’s right to market its 

FDA-approved product as a generic. Thus, the commitment not to sell an authorized generic 

cannot be characterized as merely a compromise of claims raised in the litigation, which the 

Supreme Court indicated is unlikely to raise antitrust concerns. 

Second, such a commitment can enable the brand and the generic to secure monopoly 

profits both before and after generic entry and share those profits. Rather than a cash payment, 

the parties use reciprocal agreements not to compete to share monopoly returns. The brand-name 

drug company obtains its share of monopoly profits during the period the generic challenger 

agrees to delay its entry. The generic drug company obtains its share during the period the brand 

agrees not to launch an authorized generic, which allows the generic to maintain 

supracompetitive prices. Cf. Actavis, 133 S. Ct. at 2236 (“anticompetitive consequence” was 

“maintain[ing] supracompetitive prices to be shared among the patentee and the challenger”). As 

explained above, an agreement not to launch an authorized generic could lead to substantial 

additional revenues for a first filer generic, including revenues resulting from the higher prices 

that the first filer could charge in the absence of an authorized generic.18 In these circumstances, 

 

18 Economic theory predicts—and empirical evidence discussed in the Authorized Generic 

Report confirms—that eliminating competition from the only potential competitor during the 

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13 

eliminating the threat of competition from an authorized generic can serve as the vehicle through 

which the patentee shares monopoly profits guaranteed by the generic drug company’s 

agreement to abandon its patent challenge. Consequently, the no-authorized-generic commitment 

at issue in this case could serve precisely the same function as the cash payments that were 

before the Court in Actavis.

19

IV. Exclusive Patent Licenses Are Not Immune from Antitrust Scrutiny

GSK incorrectly asserts that the challenged agreement is per se lawful because it took the 

form of an exclusive patent license. See GSK Mem. at 14-16. As the leading antitrust treatise, 

which the Supreme Court cited several times in Actavis, has observed: “Assuming the patent is 

valid, the Patent Act expressly permits exclusive licenses, but this fact alone does not render 

them immune from antitrust scrutiny.”20 Most exclusive licenses do not raise antitrust concerns 

because they promote competition, such as by combining complementary assets. But as one of 

the cases GSK relies on expressly states: “Though the grant of an exclusive license is not per se a 

 

exclusivity period will increase the prices consumers pay for the generic product after generic 

entry occurs. See Authorized Generic Report, supra note 5, at iii. 

19 The FTC has consistently categorized such commitments as payments that can induce the 

generic company to end its patent challenge and stay out of the market. See Authorized Generic 

Report, supra note 5, at 140-142; see also the FTC Bureau of Competition, Competition in the 

Health Care Marketplace, http://www.ftc.gov/bc/healthcare/drug/index.htm (last updated Apr. 

10, 2013) (annual reports summarizing filings made under the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, § 1112, 117 Stat. 2066, 

2461–63 (codified at 21 U.S.C. § 355)). 

20 12 P. AREEDA & H. HOVENKAMP, ANTITRUST LAW & 2046 at 330 (3d ed. 2012) (footnotes 

omitted). See also Antitrust Guidelines for the Licensing of Intellectual Property, supra note 12, 

Section 3.1 (“While intellectual property licensing arrangements are typically welfare-enhancing 

and procompetitive, antitrust concerns may nonetheless arise.”); see generally Orson, Inc. v. 

Miramax Film Corp., 79 F.3d 1358, 1372 (3d. Cir. 1996) (subjecting exclusive licenses to rule of 

reason analysis). 

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14 

violation of the antitrust laws, it may be an instrument by which an unlawful restraint of trade or 

a monopoly is created.”21 

GSK is likewise incorrect when it claims that Actavis holds that conduct expressly 

authorized by the Patent Act is immune from antitrust scrutiny. See GSK Mem. at 15, 16. To be 

sure, the Patent Act authorizes patent holders to grant exclusive licenses. But the Supreme 

Court’s analysis in Actavis begins with the principle that, “to refer . . . simply to what the holder 

of a valid patent could do does not by itself answer the antitrust question.” 133 U.S. at 2230-31. 

Rather, the Court explained, both patent and antitrust policies are relevant to the antitrust 

analysis. Id. at 2231, 2233. Just as the grant to corporations of the legal authority to buy and sell 

property does not mean they are authorized to engage in anticompetitive mergers, neither does 

statutory permission to use exclusive patent licenses (which are often procompetitive) mean that 

patent holders are entitled to use such licenses to violate the antitrust laws.22 GSK provides no 

legal basis for this Court to hold the challenged agreement immune from antitrust scrutiny 

merely because the alleged restraint took the form of an exclusive license. 

 

21 Benger Labs. Ltd. v. R. K. Laros Co., 209 F. Supp. 639, 648 (E.D. Pa. 1962), cited in GSK 

Mem. at 15 n.10. The other cases GSK cites likewise do not hold that exclusive licenses are 

immune from antitrust scrutiny. Only two are antitrust cases: one, In re Ciprofloxacin 

Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514 (E.D.N.Y. 2005), applied the scope-of-thepatent approach and was effectively overruled by Actavis; the other case merely reflects that 

exclusive licenses are not per se unlawful. See Genentech, Inc. v Eli Lilly & Co., 998 F.2d 931 

(Fed Cir. 1993) (“[T]he decision to grant exclusive or non-exclusive licenses or to sue for 

infringement, and the pursuit of optimum royalty income, are not of themselves acts in restraint 

of trade.”). Finally, General Talking Pictures Corp. v. W. Elec. Co., 304 U.S. 175 (1938), is a 

patent infringement case holding that the infringer had failed to establish the factual predicate for 

a patent exhaustion defense. 

22 Cf. FTC v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003 (2013) (grant of business powers 

to hospital authorities did not imply authority to make anticompetitive acquisitions); N. Sec. Co. 

v. United States, 193 U.S. 197, 345-46 (1904) (general authorization for merger transactions 

conferred by state corporation law did not exempt mergers from antitrust scrutiny). 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 18 of 22
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V. FTC Review of Settlements Under the Medicare Modernization Act 

The Court previously asked the parties, in preparation for argument on the summary 

judgment issues associated with the challenged settlement agreements, to provide additional 

information on the procedures applicable to government review of those agreements. Order, 

Docket No. 464 (July 17, 2012). While confidentiality obligations prevent the FTC from 

disclosing information related to any specific filings, the Commission has substantial experience 

reviewing patent litigation settlement agreements in the pharmaceutical industry and welcomes 

the opportunity to clarify the nature of its review. 

 Prompted by concern over the potential anticompetitive effects of pharmaceutical patent 

settlement agreements, Congress included in the Medicare Modernization Act of 2003 (“the 

MMA” or “the Act”) provisions to ensure that antitrust enforcers would have the opportunity to 

review those agreements. The reporting requirements of the MMA are straightforward: brandname and generic drug companies must file copies of certain agreements involving drugs for 

which the generic has submitted an Abbreviated New Drug Application with the FDA, including 

patent litigation settlements, with the Commission and the Department of Justice (“DOJ”) within 

ten days of execution.23 Relevant for purposes of this matter, the Act requires drug companies to 

file agreements between branded and generic firms regarding “the manufacture, marketing, or 

sale” of either a branded or generic drug, along with any agreements “related” to a covered 

agreement.24 

Reporting under the MMA simply provides the FTC and DOJ with notice and copies of 

covered agreements. The Act imposes no limits on the ability of the parties to implement their 

 

23 See Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 

108-173, § 1112, 117 Stat. 2066, 2461-63 (codified at 21 U.S.C. § 355) [hereinafter MMA] 

(requiring the filing of pharmaceutical patent settlement agreements with the FTC and the DOJ). 

24 Id. at § 1112(a), (c)(2). 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 19 of 22
16 

agreements. Moreover, it contains no mechanisms or authority for the agencies to either approve 

or disapprove agreements, and specifies no timeframe or process for any antitrust review.25 The 

MMA makes clear that failure to take action concerning a filed agreement is not a bar to a later 

enforcement action.26 

The Commission has no formal regulations or processes governing the review of 

agreements received under the MMA. Commission staff review each agreement, and the 

Commission issues annual staff reports summarizing the agreements received during each fiscal 

year.27 Staff may take further action in some instances, ranging from informal inquiries to clarify 

terms to more formal investigations that may result in an enforcement action. As with 

enforcement matters generally, these decisions are made on a case-by-case basis. 

It is important to note that a lack of action by the Commission or its staff with respect to a 

specific agreement (e.g., not investigating or challenging an agreement) does not signify 

anything about the FTC’s view of the substance of the agreement, much less implicit approval of 

that agreement. The Commission is aware that there may be some misunderstanding on this 

point. Indeed, a recent Third Circuit decision, Mylan Inc. v. SmithKline Beecham Corp., after 

 

25 See, e.g., Frequently Asked Questions About Filing Agreements with the FTC Pursuant to the 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 

http://www.ftc.gov/os/2004/01/050210pharmrules faqsection.pdf (last visited Sept. 24, 2013). 

26 See MMA, supra note 23, § 1117 (“[A]ny failure of the Assistant Attorney General or the 

Commission to take action, under this subtitle shall not at any time bar any proceeding or any 

action with respect to any agreement between a brand name drug company and a generic drug 

applicant, or any agreement between generic drug applicants, under any other provision of law . . 

. .”). 

27 See FTC Bureau of Competition, supra note 19, 

http://www.ftc.gov/bc/healthcare/drug/index.htm (links to annual reports from 2004-2012). The 

annual reports describe the agreements received during a fiscal year, reporting the total number 

of agreements along with some of their characteristics, including how many delayed generic 

entry, how many involved compensation to a generic firm, and the various types of 

compensation used. 

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17 

noting that the drug companies had submitted their patent settlement agreement to the 

Commission, appeared to suggest that changes the parties made to no-authorized-generic 

commitment in their agreement had “alleviated the FTC’s exclusivity-related concerns.” 723 F. 

3d 413, 417 (3d Cir. 2013). The opinion leaves unclear the basis for the Third Circuit’s belief 

and the parties’ briefs in the case are sealed. The Commission wishes to make clear to this Court 

that in no event should the absence of Commission action with respect to an agreement filed 

under the MMA be interpreted as indicating FTC approval or a lack of antitrust concern. 

Conclusion 

Allowing pharmaceutical companies to sidestep antitrust review by using non-cash 

payments to purchase delayed generic entry would significantly undermine the holding in 

Actavis. For the reasons discussed above, this Court should reject GSK’s argument that Actavis 

applies only to settlement agreements including a monetary payment. Because this Court’s 

interpretation of Actavis may have implications for potential FTC enforcement proceedings and 

the Commission’s views may be relevant to the Court’s consideration, the FTC respectfully 

requests to be heard as amicus. In addition, the FTC would be pleased to address any questions 

the court may have, including by participation at a hearing should the Court deem it useful. 

 

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 21 of 22
18 

Dated: September 26, 2013 Respectfully submitted, 

 /s/ Markus H. Meier 

DEBORAH L. FEINSTEIN MARKUS H. MEIER 

Director BRADLEY S. ALBERT 

Bureau of Competition ELIZABETH R. HILDER 

 JAMES E. RHILINGER 

 Attorneys for Amicus Curiae

 Federal Trade Commission 

 600 Pennsylvania Avenue N.W. 

 Washington, D.C. 20580 

JONATHAN E. NUECHTERLEIN Telephone: (202) 326-3364 

General Counsel Facsimile: (202) 326-3384 

Federal Trade Commission mmeier@ftc.gov

Case 2:08-cv-02431-MAM Document 510-2 Filed 09/26/13 Page 22 of 22
CERTIFICATE OF SERVICE 

I certify that on September 26, 2013, I electronically filed the Federal Trade 

Commission’s Motion for Leave to File Brief as Amicus Curiae with the Clerk of the Court using 

the ECF system, which sent notification to all counsel of record registered with the Court. 

 

Dated: September 26, 2013 /s/ Markus H. Meier 

 Markus H. Meier 

Federal Trade Commission 

601 New Jersey Avenue, N.W. 

Washington, DC 20580 

Tel: (202) 326-3759 

Fax: (202) 326-3384 

mmeier@ftc.gov

Counsel for Amicus Curiae 

 Federal Trade Commission

Case 2:08-cv-02431-MAM Document 510-3 Filed 09/26/13 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

Case no.: 2:08-cv-2431 

In re: WELLBUTRIN XL ANTITRUST 

LITIGATION 

This Document Relates To: 

Case no.: 2:08-cv-2433 

All Actions 

 

[PROPOSED] ORDER 

Upon consideration of the Federal Trade Commission’s Motion for Leave to File Brief as 

Amicus Curiae, any opposition thereto, and the applicable law, it is this _____ day of 

[September] 2013, 

ORDERED, that the Federal Trade Commission’s Motion for Leave to File Brief as 

Amicus Curiae is GRANTED; and, it is further 

ORDERED, that the Clerk of the Court accept for filing within _____ days of the date of 

this Order the Federal Trade Commission Brief as Amicus Curiae; and, it is further 

ORDERED, that the Clerk of the Court distribute a copy of this Order to all counsel of 

record. 

Date: ____________________________ 

 The Honorable Mary A. McLaughlin 

 United States District Court Judge 

Case 2:08-cv-02431-MAM Document 510-4 Filed 09/26/13 Page 1 of 1