FTC Files Complaint Against Generic Drug Makers

Washington DC (Feb. 2)-The Federal Trade Commission has filed a complaint in federal district court challenging agreements in which Solvay Pharmaceuticals (Marietta, GA) paid generic drug makers Watson Pharmaceuticals (Corona, CA) and Par Pharmaceutical Companies (Woodcliff Lake, NJ) to delay generic competition to Solvay’s branded testosterone-replacement drug “AndroGel”, a prescription pharmaceutical with annual sales of more than $400 million, according to an FTC press release.

“At a time of escalating health care costs, these unlawful agreements deny patients the benefit of competition between branded and generic pharmaceuticals and ultimately cost consumers hundreds of millions of dollars a year,” said Acting FTC Bureau of Competition Director David P. Wales, in the FTC release.

The complaint, filed in the US District Court for the Central District of California, says that Watson and Par, via its partner Paddock Laboratories (Minneapolis, MN) each sought regulatory approval from FDA to market generic versions of AndroGel. In their FDA filings, both companies certified that their products did not infringe the only patent Solvay had relating to AndroGel, and that the patent was invalid, according to FTC. The complaint charges that Solvay agreed to pay the generic companies to abandon their patent challenges and agree not to bring a generic AndroGel product to market for nine years, until 2015.

“Today’s action reaffirms the Commission’s commitment to protect American consumers from artificially high prescription drug prices that result when branded and generic pharmaceutical companies decide to collude rather than compete,” Wales said in the FTC release. “The evidence in this case will show that Watson and Par agreed to defer their generic entry for nine years, not out of respect for Solvay’s patent, but due to the size of Solvay’s payments to them.”

The court action seeks to promote competition between Solvay and generic drug makers that had sought to introduce generic versions of the branded prescription drug AndroGel. AndroGel, Solvay’s second highest selling pharmaceutical product, is a pharmaceutical gel containing synthetic testosterone. It is approved for testosterone replacement therapy in men with low testosterone levels, which often are associated with advancing age, certain cancers, and HIV/AIDS, among other conditions.

In May 2003, Watson and Paddock, which partnered with Par, each filed applications for FDA approval to market generic versions of AndroGel. Solvay’s patent on Androgel was issued in January 2003, with an expiration date of August 2020. By early 2006, Watson had received final approval to market its generic product. The complaint alleges that Solvay, acted unlawfully by paying Watson and Par a share of its AndroGel profits to abandon their patent challenges and agree to delay generic entry until 2015. As a result, the complaint states that the defendants are cooperating on the sale of AndroGel and sharing the monopoly profits, rather than competing. The FTC is seeking a final court judgment declaring that Solvay’s agreements with Watson and with Par and Paddock violate Section 5(a) of the FTC Act, and injunctive relief restoring competitive conditions and barring the defendants from engaging in similar or related conduct in the future.

To view the FTC compliant in full, click here.