This document summarizes the Hatch-Waxman Act and related issues involving patents, competition, and generic drugs. It discusses the Bayer-Barr litigation over the drug Cipro and the resulting antitrust litigation. While private plaintiffs argued the settlement violated antitrust laws by delaying generic competition, courts found the settlement was within Bayer's patent rights as it did not prevent other challenges and fell within the exclusionary zone of the patent. However, conflicts remain around balancing patent and drug competition policies.
1. 1
Patents, Competition,
Antitrust and Generic Drugs:
Resolving Hatch-Waxman
Issues
Kirby B. Drake
Fulbright & Jaworski L.L.P.
ACS National Meeting – March 2009
2. 2
Hatch-Waxman Act
Drug Price Competition and Patent Term Restoration
Act of 1984
Easier for generic manufacturer to enter market by
permitting it to file an Abbreviated New Drug
Application (ANDA)
● ANDA must show that generic version is
“bioequivalent” to approved drug
● May include Paragraph IV certification
3. 3
Hatch-Waxman Act
Incentive to generic manufacturer to be first to file
ANDA with Paragraph IV certification:
● 180-day period of marketing exclusivity with
respect to other generic manufacturers
No provisions in original version of Act for review
of settlements of Paragraph IV patent litigation
4. 4
Bayer-Barr Cipro Litigation
Bayer patent relates to
active ingredient in Cipro -
ciprofloxacin hydrochloride
Bayer patent issued in 1987
Bayer received approval
from FDA to market Cipro
in October 1987
5. 5
Bayer-Barr Cipro Litigation
1991: Barr applied to FDA to bring generic to
market claiming Bayer patent related to Cipro was
invalid and unenforceable
1992: Bayer sued Barr for patent infringement
1997: Bayer started paying Barr in exchange for
agreement not to manufacture generic Cipro
6. 6
Bayer-Barr Cipro Settlement
Bayer-Barr settlement terms
● Bayer agreed to pay approximately $49.1M to
Barr (initial payment)
● Barr converted Paragraph IV certification to
Paragraph III certification
● Barr agreed not to challenge validity or
enforceability of Bayer patent
● Barr could sell a competing product beginning
6 months before the expiration of Bayer patent
7. 7
Follow-On Cipro Patent Litigation
Bayer filed for reexamination of its patent and
validity of claims affirmed by PTO
Bayer defended its patent against 4 other generic
challengers
● Two on summary judgment (Schein, Mylan)
● One after trial (Carlsbad)
● One after generic company withdrew its
Paragraph IV certification (Ranbaxy)
Validity and enforceability of the Bayer patent
upheld in lawsuits
8. 8
Cipro Antitrust Litigation
Lawsuits filed in 2000 and 2001 by private plaintiffs
to challenge Bayer-Barr settlement
Various lawsuits consolidated in federal court in
New York
9. 9
Cipro Antitrust Litigation
Policy bases for antitrust lawsuit:
● Prop-up drug price at expense of consumers and
health insurance companies
● Blocking access to adequate suppliers and
cheaper, generic versions of Cipro
● Generic manufacturers forced to abandon efforts
to bring generic Cipro to market
● Manipulation of price and supply of drug
10. 10
Cipro Antitrust Litigation
Argued violations of Sections 1 and 2 of the
Sherman Act and violations of state antitrust and
consumer protection laws
Summary judgment granted – no antitrust violations
● Relevant market is Cipro
● Bayer had the market power
● Settlement was in exclusionary zone of the
Bayer patent
11. 11
Cipro Antitrust Litigation
NY court assessed rulings in Hytrin and Cardizem
litigation where courts applied per se analysis and
found settlement agreements illegal
12. 12
Hytrin Litigation
Abbott settled patent litigation with Geneva and
Zenith Goldline
Agreement was “interim” agreement and did not
finally resolve patent issues
Settlement agreement found per se unlawful
13. 13
Cardizem Litigation
“Interim” settlement of patent litigation between
HMRI and Andrx
Settlement agreement found to be per se unlawful -
reduces competition in market
14. 14
Cipro Antitrust Litigation
Found Cipro settlement distinguishable from
settlements in Hytrin and Cardizem litigation
● Agreements did not finally dispose of litigation
● Agreements potentially blocked competition
from non-infringing products
15. 15
Cipro Antitrust Litigation –
Federal Circuit
Arguments on appeal to Federal Circuit
● Agreement was per se unlawful
● Agreement did not fall within exclusionary zone
of the Bayer patent
● Failure to consider law of the regional circuits
● Failure to appreciate effects of agreement on
other generic manufacturers
● Failure to consider that agreements may preserve
Barr’s claim to 180-day exclusivity period
16. 16
Cipro Antitrust Litigation –
Federal Circuit
NY court properly applied rule of reason analysis
1. Determined relevant market
2. Found that Bayer had market power within
market
3. No bottleneck on challenges to patent or
restraint on competition outside “zone of
exclusion” of patent
Reverse payment within “zone of exclusion” is not
illegal
17. 17
Cipro Antitrust Litigation –
Federal Circuit
Patents are naturally anticompetitive
Bayer-Barr agreement within rights of patent holder
“The essence of the agreements was to exclude
the defendants from profiting from the
patented invention. This is well within Bayer’s
right as the patentee.”
Judge Prost
18. 18
Cipro Antitrust Litigation –
Federal Circuit
Not problematic that Barr agreed not to challenge
patent
● Typical provision in settlement of patent cases
● Settlement did not prevent others from
challenging patent
● Settlements favored even when anticompetitive
19. 19
Cipro Antitrust Litigation –
Federal Circuit
No antitrust violation by settlement if:
● Patent holder makes payments to generic
manufacturer who filed ANDA with Paragraph
IV certification
● Generic manufacturer agrees not to market its
product until expiration of the patent
● Patent lawsuit dismissed and generic
manufacturer agrees not to challenge the validity
or enforceability of the patent
20. 20
Cipro Antitrust Litigation –
Federal Circuit
Must prove that patent litigation was objectively and
subjectively baseless
Did not find Bayer enforced patent without
reasonable basis
21. 21
Changing Times Since Cipro
Hatch-Waxman Act now includes “forfeiture”
events that may eliminate the first filer’s 180-
day period of exclusivity
Settlement agreements must now be filed with
the FTC and the DOJ for review
22. 22
Congressional Action
S.369 – Preserve Access to Affordable Generics Act
● Adds new section to Clayton Act
● Generic manufacturer who violates would forfeit
180-day period of exclusivity
● Prohibit reverse payments
23. 23
Congressional Action
H.R. 1902 – Protecting Consumer Access to Generic
Drugs Act of 2007
● Includes same or similar prohibited conduct as in
recently proposed Senate act
● Did not specifically propose to amend Clayton
Act
24. 24
Resolving Hatch-Waxman Issues
Conflict in the courts
Conflict between courts and Congress and/or private
consumers
Conflict between importance of patents in the
pharma sector and suggestion that pharma
companies do not have right to protect their patents
25. 25
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