Friday, June 16, 2006, 3:38 PM

FTC Files Supplemental Brief In Support of Cert in Schering-Plough

As mentioned before in this blog, the Supreme Court will soon decide whether to grant cert. in FTC v. Schering-Plough Corporation, a case involving so-called "reverse payments" from a branded pharmaceutical manufacturer to a generic to delay entry. The FTC claimed such practices are anticompetitive, the Eleventh Circuit disagreed, and the FTC is seeking review by the Supreme Court. In response to a request by the Supreme Court, the Solicitor General filed a brief on behalf of the United States recommending that the Court deny cert. because this was not the best case to address this sticky issue (I'm paraphrasing here). Now, the FTC has filed a supplemental brief in favor of granting cert. and responding to the Solicitor General's brief. It is very interesting to see two federal agencies take opposing positions on this issue. Here is a juicy quote from the FTC's supplemental brief:

"Despite the acknowledged importance of the legal issue presented by the petition, the United States asks that the Court await a hypothetically more suitable vehicle for review. The reasons it advances, however, fail to refute the Commission's showing that plenary review is both appropriate and much needed.... [T]he United States fails to appreciate the extent to which the ruling below will place pharmaceutical patent settlements beyond antitrust scrutiny, or the fundamental inconsistency between such a rule of law and the policies of Congress, as set forth in the Hatch-Waxman Act. The United States also overstates the difficulty this Court would have in reversing a court of appeals ruling that wholly disregards the proper standard of review of administrative factfinding.

More importantly, however, the United States does not address the urgent practical reasons why immediate review is needed. As the Commission and several amici have explained, the economic impact of the ruling below on consumers of prescription drugs -- including the States -- is staggering.... Indeed, billions of dollars in added prescription drug costs annually are at stake.... The decision has 'opened a Pandora's box' of anticompetitive settlements between brands and generic competitors.... Harm is very likely ongoing each day that the decision below prevails."

This case raises many interesting conflicts, including:

(1) Conflict between different agencies of the federal government.
(2) Conflict between the lower court decision and congressional intent.
(3) Conflict between the lower court decision and federal agency factfinding.
(4) Conflict between businesses and consumers (which include state governments).
(5) Conflict between the courts of appeal.
(6) Conflict between antitrust law and patent settlements.

To read a previous post on the Solicitor General's brief, click here.

To read a previous post on a speech by a FTC Commissioner on this topic, click here.

A copy of the FTC's supplemental brief is archived at the Antitrust Review.

Keep reading for more updates on the Schering-Plough saga.


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