Amicus Curiae Brief — Federal Trade Commission v. Schering-Plough Corp.

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Text

Congressional Budget Office, Would Prescription

Drug Importation Reduce U.S. Drug Spending?

tb & | BPPPPPPrrrerrrrrrrrirrerr errr 1

Thomas F. Cotter, Antitrust Implications of Patent

Settlements Involving Reverse Payments;

Defending a Rebuttable Presumption of Illegality

in Light of Some Recent Scholarship,

71 Antitrust L.J. 1069 (2004) 2... 0 ccc eee 9

Daniel A. Crane, Exit Payments in Settlement of

Patent Infringement Lawsuits. Antitrust Rules

and Economic Applications,

PO Pe ie EEG FES GED Sb bb ce ccéadevcccesecenés 8

FDA Center for Drug and Evaluation and Research,

Paragraph IV Patent Certifications As of

August 15, 2005, U.S. Food & Drug Administration,

(created Feb. 16, 2005, updated August 15, 2005)

available at http://www.fda.gov/cder/ogd/ppiv.htm .. 14

Food and Drug Administration, Savings from

Generic Drugs Purchased at Retail Pharmacies

Se Ss SEED cevcvccuverdcscoecesicosedsiseens 13

David Gross, et al, 7rends in Older Americans-

First Quarter 2005 Update, AARP Public

Policy Institute (July 2005), available at

http://www.assets.aarp.org/rgcenter/health/

Gee SEES weccccsteevéesecececueess 12

H.R. Rep. 98-857 (1), at 17,

1984 U.S.C.C_A.N. 2647, 2650 .......... cee Gee

Stephen Heffler et al., Health Spending Projections

Through 2013, Health Affairs Web Exclusive,

Sue DER da dence voucsauewanscenckedseues

Herbert Hovenkamp, Mark D. Janis & Mark A. Lemley,

Balancing Ease and Accuracy in Assessing

Pharmaceutical Exclusion Payments,

88 Minn. |. ev. 712 (2004) .. 2.2... cece ee eee.

Herbert Hovenkamp, Mark D. Janis & Mark A. Lemley,

Anticompetitive Settlement of Intellectual

Property Disputes,

87 Minn. L. Rev. 1719 (2003) .... 2... 6. ce eee ees

Henry J. Kaiser Family Foundation,

Prescription Drug Trends (Oct. 2004) .............

James Langenfeld, & Wenqing Li, /ntellectual

Property and Agreements to Settle Patent

Disputes: The Case of Settlement Agreements

with Payments from Branded to Generic

Drug Manufacturers,

70 Antitrust L.J. 777 (2003) .. 6. cece eens

Jonathan M. Lave, Responding to Patent Litigation

Settlements: Does the FTC Have It Right Yet?,

64 U. Pitt. L. Rev. 201 (2002) ....... 0.0 e ccc cece.

———— vil

Marcy Lobanoff, Comment, Anti-Competitive

Agreements Cloaked as “Settlements”

Thwart the Purpose of the Hatch-Waxman Act,

SO Gemay LF. BSGE GRE oo ec ccecectucccucewsbes 8

Kevin D. McDonald, Hatch-Waxman Settlements

and Antitrust: On “Probabilistic” Patent Rights

and False Positives, Antitrust, Spring 2003, at68 .... 8

Kevin D. McDonald, Patent Settlements and

Payments that Flow the “Wrong” Way:

The Early History of a Bad Idea,

15 Antitrust Health Care Chron. (ABA Section

of Antitrust Law Newsletter) 2 (2002) .............. 8

National Conference of State Legislatures,

2005 Prescription Drug State Legislation

Mid-Year Edition: August 15,2005 ........... 13,14

NDC Health Corporation, The Top 200

Prescriptions for 2004 by U.S. Sales

(Mar. 2005) available at http://www.ndchealth.

com/press_center/uspharmaindustrydata.asp ........ 14

Maureen A. O’Rourke, & Joseph F. Brodley,

An Incentives Approach to Patent Settlements:

A Commentary on Hovenkamp, Janis & Lemley,

87 Minn. L. Rev. 1767 (2003) ..............eeeeee 8

Marc G. Schildkraut, Patent-Splitting Settlements

and the Reverse Payment Fallacy,

71 Antitrust L.J. 1033 (2004) ....... cee eee 7

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Carl Shapiro, Antitrust Limits to Patent Settlements,

34 RAND J. Econ. 391 (2003).... 8.9

Statement of Senator Orrin Hatch,

148 Cong. Rec. $7565-01 ... soe Geet

INTEREST OF THE AMICI CURIAE

The amici states listed on the front cover (“the States”), by

their attorneys general, file this brief as friends of the Court on

behalf of Petitioner, the Federal Trade Commission (“FTC”).

The attorneys general, as the chief law enforcement or legal

officials for their respective states, enforce both federal and

State antitrust laws and, thus, have a considerable interest in the

issues that this case raises before the Court. Specifically, the

States have a profound interest in ensuring that the federal

antitrust laws are interpreted in harmony with sound antitrust

policy and relevant judicial precedent.

In their capacities as parens patriae, the States, through

their attorneys general, are empowered to protect the consumers

in their states from violations of the federal antitrust laws. See

15 U.S.C. § 15c. State attorneys general also seek to ensure

that consumers have affordable access to the medications that

they need.’ The attorneys general enforce the antitrust laws to

ensure that consumers are not denied access to vital health care

needs because of artificially high prices resulting from illegal

conduct on the part of drug companies.

' In January 2005, Attorney General of Vermont William H. Sorrell,

President of the National Association of Attorneys General convened

a symposium as part of his Presidential Initiative on Pharmaceutical

Pricing. The symposium gathered pharmaceutical experts from

government, industry and the private sector to study the benefits as

well as the escalating costs of prescription drugs and to seck

solutions to the difficulties faced by consumers and government

agencies alike in budgeting to cover their rapidly increasing

pharmaccutical expenses. In June 2005, Attorney General Sorrell

issued his 2005 NAAG Presidential Initiative Report: Addressing the

Cost and Benefits of Prescription Drugs, available at

http://www.naag.org/naag/pdf/20050708-PR-

AddressingTheCostAndBencefitsOf PrescriptionDrugs pdf.

The attorneys general also represent government entities,

state agencies and political subdivisions that pay or reimburse

for prescription drugs with public funds. The States are

struggling to finance state employee drug benefit plans, the

prescription drug needs of state hospitals and prisons, injured

workers insurance funds and Medicaid and other state

pharmaceutical assistance programs.’ The States spend billions

of taxpayers’ dollars on pharmaceutical products every year.

The State of Maryland, for example, which comprises only

about 1.8 percent cf the nation’s population, spent

approximately $710 million i 1 2004-2005 on prescription drugs

for the State’s Medicaid and pharmacy assistance program

beneficiaries alone.’

In these two capacities, as parens patriae representatives

of consumers and as counsel acting on behalf of the states’

proprietary interests, the attorneys general have prosecuted or

are pursuing antitrust cases and investigations against pharma-

ceutical companies that, like the Schering matter before the

Court, involved reverse payment settlements of patent

infringement suits between brand name and generic drug

companies.‘ Additionally, the Commonwealth of Pennsylvania

currently has an antitrust action pending against Respondents

Schering-Plough Corp. and Upsher-Smith Laboratories, Inc.

? NAAG Presidential Initiative Report at p. 93.

* Derived from Maryland State Pharmacy Expenditures for Fiscal

Year 2005, Maryland Pharmacy Program, Department of Health &

Mental Hygiene, unpublished materials on file with the State.

* See, e.g., In re Cardizem CD Antitrust Litigation, MDL No. 1278

(E.D. Mich. 2003); Jn re Terazosin Hydrochloride Antitrust

Litigation, MDL No. 1317 (S.D. Fla. 2005);-Jn re Buspirone

Antitrust Litigation, MDL No. 1413 (S.D.N.Y. 2002); Ohio v.

Bristol-Myers Squibb Co., Civ. No. 02-1080 (D.D.C. 2003).

alleging the same illegal conduct that is the subject of the

FTC’s petition.’ Finally, many states have ongoing non-public

antitrust investigations involving several pharmaceutical

companies, possible abuses of patent protection and potentially

illegal agreements between competitors to deter generic entry.

Antitrust prosecutions, settled on behalf of consumers and

government purchasers, have resulted in strong injunctive relief

and monetary recoveries of hundreds of millions of dollars in

overcharges to public and private purchasers of prescription

drugs.

SUMMARY OF ARGUMENT

There is an irreconcilable conflict between the Sixth and

Eleventh Circuits as to the appropriate antitrust analysis of

patent settlements that involve reverse payments, 1.¢€., payments

from the patentee to the alleged infringer. This split in legal

precedent creates confusion regarding the scope of patent nghts

and frustrates the consistent enforcement of federal and state

antitrust laws. Furthermore, the Eleventh Circuit’s decision 1s

analytically unsound and ill-advised because it ignores the

statutory balance between intellectual property rights and

competition, resulting in harm to consumer and state purchasers

of prescription drugs. Finally, the Eleventh Circuit’s decision

disserves the public interest in two ways. First, the decision

nullifies any benefit that would otherwise flow to the public as

a result of the settlement of legal disputes. Second, it

discourages enforcement of the antitrust laws by requiring

litigation of the underlying patent dispute, even before

analyzing the anticompetitive effects of the reverse payment

settlement. Its test examines (1) the scope of the exclusionary

> See Pennsylvania v. Schering-Plough Corp., Civ. No. 01-328-E

(filed Oct. 4, 2001 W.D. Pa.) transferred to In re K-Dur 20 Antitrust

Litigation, MDL No. 1419 (D.N.J.2001).

potential of the patent; (2) the extent to which the agreements

at issue exceed that scope; and (3) the resulting anticompetitive

effects. The Eleventh Circuit, thus, articulates a test that is

inconsistent with well-settled antitrust principles and precedent;

its analysis improperly shifts burdens of proof, thereby making

it unduly onerous for antitrust enforcers to mount effective

challenges to anticompetitive patent settlement agreements.

ARGUMENT

I. THE ELEVENTH CIRCUIT’S DECISION

DIRECTLY CONFLICTS WITH THE SIXTH

CIRCUIT’S DECISION ON AN ISSUE OF

NATIONAL CONSEQUENCE.

The Eleventh Circuit's holding that reverse payments are,

in effect, per se legal directly conflicts with the Sixth Circuit’s

decision which held that patent infringement disputes settled by

reverse payments are per se illegal. This Court's resolution of

the conflict is needed not only to provide consistency in the

courts, but also to provide guidance to the pharmaceutical

industry, state and federal antitrust enforcement agencies and

all public and private purchasers of prescription drugs.

Both proponents and opponents of per se antitrust analysis

of reverse payment settlements have acknowledged the conflict

between the Circuits and have sought the Court’s review. On

October 12, 2004, the Court denied two pertinent petitions for

certiorari. In /n re Cardizem CD Antitrust Litigation,’ the

Sixth Circuit held that an agreement among parties to a patent

infringement suit, whereby the patent owner paid the alleged

* In re Cardizem CD Antitrust Litig., 332 F.3d 896 (6th Cir. 2003),

cert. denied sub nom. Andrx Pharms., Inc. v. Kroger Co., 125 $.Ct.

307 (2004).

infringer to stay out of the United States market for Cardizem

CD and its generic equivalents, constitutes a horizontal marke*

allocation agreement and, therefore, is per se illegal under the

Sherman Act.’ The petitioner, pharmaceutical manufacturer

Andrx Pharmaceuticals, Inc., in appealing the Sixth Circuit's

finding that reverse payment settlements are per se illegal,

argued that the Sixth and Eleventh Circuits reached opposite

conclusions on the same issue in indistinguishable cases."

On the same day, the Court denied the petition for

certiorari in Valley Drug Co. v. Geneva Pharmaceuticals, Inc.’

The Valley Drug case, decided by the Eleventh Circuit, held

that settlement agreements, whereby the patent owner paid the

alleged infringers not to enter the United States market for

Hytrin, its generic equivalent and other generic terazosin

hydrochloride products, are not per se illegal under the Sherman

Act." That petition for a writ of certiorari was filed by

Louisiana Wholesale Drug Company, Inc. and Valley Drug

Company, who were not the parties to the patent infringement

settlement, but rather were purchasers allegedly injured by the

anticompetitive agreement entered into by the two

pharmaceutical companies, Geneva Pharmaceuticals, Inc. and

Abbott Laboratories. Unlike the petitioner seeking certiorari in

the Andrx case, the petitioners in Valley Drug argued that the

court of appeals erred in failing to apply the per se rule to

” 332 F.3d at 908-09.

* See Petition for a Writ of Certiorari, Andrx Pharms., 2003 WL

22867750 at *2,*8-*12.

* 344 F.3d 1294(11" Cir. 2003), cert. denied ,125 S. Ct. 308 (2004).

° Jd. at 1309-10.

reverse payment settlements of patent disputes.'' Nevertheless,

petitioners in Valley Drug also acknowledged the split between

the Sixth and Eleventh Circuits in indistinguishable cases

addressing the same issue.'? Thus, both sides of the debate,

those favoring per se treatment and those opposing it, have

acknowledged the conflict between the Circuits and have

requested the Court’s guidance in resolving it.

This case involves a third antitrust challenge to agreements

between parties in a patent infringement suit where the patent

owner paid the alleged infringers not to enter the U.S. market

for a branded drug, here K-Dur 20, and its generic equivalents.

Given the Eleventh Circuit’s decision in Valley Drug, it came

as no surprise that Schering-Plough and Upsher-Smith

Laboratories, Inc. chose that forum in which to file their appeal

of the FTC’s ruling against them. Indeed, the Eleventh Circuit

went beyond its liolding in Valley Drug and ruled that reverse

or exclusion payments from the patent owner to the alleged

infringer are not only not per se illegal, but further are fully

within the potential exclusionary power of the challenged

patent and therefore, in effect, per se lawful.'’ More troubling

'' See Petition for a Writ of Certiorari, Valley Drug, 2004 WL

322428 at *19-*24.

? Id.

' See Schering-Plough Corp. v. Federal Trade Commission, 402

F.3d 1056 at 1075-76 (11" Cir. 2005). In its petition, the FTC does

not contend (and the States do not here assert) that the Eleventh

Circuit erred in failing to apply the per se rule to the K-Dur 20

agreements. Instead, the States highlight the Circuit conflict in order

to stress the urgency of the need for the Court’s review of patent

settlement agreements that raise antitrust implications, especially

those that involve reverse payments and even more critically, those

that purport to resolve the patent infringement dispute within the

still, the court of appeals held that before any anticompetitive

effect of the settlement could be measured, the antitrust plaintiff

must first litigate the merits of the underlying patent dispute.

Before the Eleventh Circuit’s Schering opinion, some

questioned whether the Circuits were truly split as to the

appropriate antitrust analysis of reverse payments settlements. "*

Today, however, no doubt exists that the issue is ripe for the

Court’s review.’ The Sixth Circuit and the Eleventh Circuit

cannot both be correct. In fact, at least in the context of an

agreement that resolves the patent dispute within the patent's

potential term and scope, some would argue that neither

analysis adequately balances the competing interests

represented at the intersection of intellectual property law and

antitrust principles, further indicating the need for the Court's

review. The States request that the Court grant the FTC's

petition and resolve this irreconcilabie conflict between the

Circuits.

potential term and scope of ¢ challenged patent.

* See, e.g., Brief for the United States 2s Amicus Curiae, Andrx

Pharms. v. Kroger Co., 125 §. Ct. 307 (2004), 2004 WL 1562075 at

*11-*16.

'’ Even counsel for Respondent Schering-Plough Corp.

acknowledged the conflict between the Sixth and Eleventh Circuits

(months before the Eleventh Circuit's Schering decision),

characterizing the range in the two courts’ treatments of reverse

payment settlements as “from per se condemnation to virtual per se

legality.”” See Marc G. Schildkraut, Patent-Splitting Settlements and

the Reverse Payment Fallacy, 7\ Antitrust L.J. 1033, 1039 (2004).

fl. THE ELEVENTH CIRCUIT’S DECISION

SUBVERTS THE PURPOSE AND EFFECT OF THE

HATCH-WAXMAN ACT AND INJURES

CONSUMERS AND GOVERNMENT

PURCHASERS.

In the past five years, there has been an explosion of

academic commentary addressing the Drug Price Competition

and Patent Term Restoration Act of 1984, Pub. L. No. 98-417,

98 Stat. 1585 (1984), also known as the Hatch-Waxman

Amendments to the Federal Food, Drug & Cosmetic Act

(“Hatch-Waxman”), and the antitrust implications of patent

infringement settlements involving reverse payments. '* Federal

* See, e.g., Daniel A. Crane, Exit Payments in Settlement of Patent

Infringement Lawsuits: Antitrust Rules and Economic Applications,

54 Fla. L. Rev. 747, 752 (2002), Herbert Hovenkamp, Mark D. Janis

& Mark A. Lemley, Anticompetitive Settlement of Intellectual

Property Disputes, 87 Minn. L. Rev. 1719 (2003); Herbert

Hovenkamp, Mark D. Janis & Mark A. Lemley, Balancing Ease and

Accuracy in Assessing Pharmaceutical Exclusion Payments, 88

Minn. L. Rev. 712 (2004); James Langenfeld & Wenging Li,

Intellectual Property and Agreements to Settle Patent Disputes: The

Case of Settlement Agreements with Payments from Branded to

Generic Drug Manufacturers, 70 Antitrust L.J. 777 (2003); Jonathan

M. Lave, Responding to Patent Litigation Settlements: Does the FTC

Have It Right Yet? , 64 U. Pitt. L. Rev. 201 (2002); Marcy Lobanoff,

Comment, Anti-Competitive Agreements Cloaked as “Settlements”

Thwart the Purpose of the Hatch-Waxman Act, 50 Emory LJ. 1331,

1353(2001); Kevin D. McDonald, Patent Settlements and Payments

that Flow the “Wrong” Way: The Early History of a Bad Idea, \5

Antitrust Health Care Chron. (ABA Section of Antitrust Law

Newsletter) 2, 12-13 (2002), Kevin D. McDonald, Hatch-Waxman

Settlements and Antitrust: On “Probabilistic” Patent Rights and

False Positives, Antitrust, Spring 2003, at 68; Maureen A. O'Rourke

& Joseph F. Brodley, An Jncentives Approach to Patent Settlements:

A Commentary on Hovenkamp, Janis & Lemley, 87 Minn. L. Rev.

1767 (2003); Carl Shapiro, Antitrust Limits to Patent Settlements, 34

courts have struggled with these complex, yet critical issues,

resulting in confusing and inconsistent rules of law. While

opinions diverge widely on what the law should be with regard

to reverse payments, amidst the lively debate, there is serious

doubt that the Eleventh Circuit's approach in Valley Drug and

Schering is compatible with the provisions of the Hatch-

Waxman Act that promote generic competition."’

By enacting Hatch-Waxman, Congress intended not only

to preserve valid and enforceable patent rights, but, at the same

time, to expedite the availability of generic alternatives to brand

name prescription drugs. Hatch-Waxman encourages generic

entry by (1) permitting the generic drug applicant to rely on the

safety and efficacy studies performed by the brand name drug

pioneer in obtaining FDA approval; and (2) encouraging

generics to challenge weak or dubious patents as invalid or not

infringed by awarding the first successful challenger 180 days

of marketing exclusivity. 21 U.S.C. § 355 (j(5\B){iv)(1 984),

amended by \17 Stat. 2066, Pub.L. 108-173 § 1102 (2003). In

the House Report recommending adoption of the Act, the

House Committee on Energy and Commerce noted the cost

savings to federal and state governments as the result of

additional generic entry. After noting that the availability of a

generic alternative for one drug had saved the Department of

Defense $1.2 million, the Committee said, “Federal and state

governments will be denied comparable savings on drugs

approved after 1962 because of the lack of an approval

procedure [for new generic drugs}.” H.R. Rep. 98-857 (1), at 17,

RAND J. Econ. 391 (2003).

" See, e.g., Thomas F. Cotter, Antitrust Implications of Patent

Settlements Involving Reverse Paymenis, Defending a Rebuttable

Presumption of Illegality in Light of Some Recent Scholarship, 71

Antitrust LJ. 1069(2004).

1984 U.S.C.C.A.N. 2647, 2650.

In contrast to the goals set forth in Hatch-Waxman, the

Eleventh Circuit's decision not only fails to encourage generic

entry, it affirmatively supports collusive resolutions of patent

infringement challenges. Specifically, the Eleventh Circuit

decision allows Hatch-Waxman to be manipulated to shield

payments from one competitor to another in exchange for the

second competitor’s forbearance in entering the market. If the

Eleventh Circuit were correct, generic entry following a patent

challenge would be rare. In virtually all cases, the patent owner

can afford to pay the generic challenger more to drop its

challenge and exit the market than the generic could make

marketing its product. In other words, if the patent owner’s

potential loss exceeds the generic challenger’s potential gain,

it will be in both parties’ mutual best interest to settle the case

by dividing up monopoly profits. While it is a win-win

situation for the pharmaceutical companies, the big losers are

the victims of antitrust violations: the end-payor purchasers of

prescription drugs, primarily consumers, government agencies

and healthcare benefit plans.

When Congress amended the Hatch-Waxman Act in 2003,

it cited as one reason for legislative reform that the unusual

configuration of interests and incentives created by the statutory

scheme had the unintended consequence of enticing brand and

generic drug companies to enter into potentially anticompetitive

settlement agreements.'* Among the corrective provisions

See 148 Cong. Rec. 7565-01, $7566 (2002) (Statement of Senator

Orrin Hatch, Senate Floor Debates on the Greater Access to

Pharmaceuticals Act, S. 812) (“As a coauthor of the Drug Price

Competition and Patent Term Restoration Act, I can tell you that I

find these type of reverse payment collusive arrangements

appalling... We did not wish to encourage situations where

enacted to curtail anticompetitive abuses is the requirement that

brand and generic drug companies entering into patent litigation

settlements submit those settlements to federal antitrust

enforcers for review.’ These reviews of patent settlements by

antitrust agencies are likely to be of marginal effectiveness in

ensuring compliance with the antitrust laws if government

challenges of those agreements are held to the incorrect and

overly burdensome standards set forth by the Eleventh Circuit.

The benefits that Congress intended to bestow upon

purchasers of prescription drugs in this country through Hatch-

Waxman are needed now more than ever before. Innovations

in pharmacological research, which deserve appropriate

marketing protection by proper interpretation of the patent laws,

have led to an increased ability to treat many medical ailments

pharmaceutically.

Every year, this country spends more than $100 billion on

prescription drugs and those expenditures are rising rapidly.”

payments were made to generic firms not to sell generic drugs and

not to allow multi-source generic competition.... However the K-

; Dur case ultimately is decided, I commend [the FTC for continuing

its] policy of zealously reviewing these types of reverse payment

cases to determine whether such agreements run afoul of the antitrust

laws”).

‘* Medicare Prescription Drug, Improvement, and Modernization

Act of 2003, Pub. L. No. 108-173 117 Stat. 2066 §§ 1111-1118.

* Spending in the U.S. increased an average annual rate of 14.5%

from 1997-2002. See Congressional Budget Office, Would

Prescription Drug Importation Reduce U.S. Drug Spending? (April

29, 2004). According to the Centers for Medicare and Medicaid

Services, pharmaceutical expenditures rose 14.9% in 2002 and ©

10.7% in 2003. Center for Medicare & Medicaid Services,

For example, in 2002, nationwide expenditures for prescription

drugs totaled over $160 billion.” However, not only is the

country buying more drugs, pharmaceutical prices continue to

rise as well. During the decade from 1993-2003, retail

prescription drug prices increased an average of 7.4 percent per

year, nearly three times the average yearly inflation rate of 2.5

percent during the same time period.” Moreover, the prices for

drugs claiming patent protection continue to rise at an alarming

rate relative to the increase in price for generic substitutions.

The cost of brand name prescription drugs has been rising

steadily at twice the rate of inflation, while the cost of generics

is increasing at the rate of less than | percent.”

The FDA has estimated that consumers and state agencies

can save at least 50 percent on their pharmaceutical needs by

Highlights-National Health Expenditures, 2003 at | (January 11,

2005) (“CMS, Highlights”). In the twenty years since Hatch-

Waxman was enacted, while healthcare spending has increased

dramatically overall, expenditures for prescription drugs have

remained the fastest growing component. See The Henry J. Kaiser

Family Foundation, Prescription Drug Trends at 1 (Oct. 2004);

Stephen Heffler et al., Health Spending Projections Through 2013,

Health Affairs Web Exclusive, Feb. 11, 2004.

" See Prescription Drug Trends at | (Oct. 2004)

® Id., CMS, Highlights.

» A survey of wholesale prices conducted by AARP and published

in August 2005, showed that a 12-month average increase for 195

brand name drugs was 6.6% or more than double the 3.1% rise in the

Consumer Price Index that monitors general inflation rates. See

David Gross, et al., Trends in Older Americans-First Quarter 2005

Update, AARP Public Policy Institute (July 2005), available at

http://www.assets.aarp.org/ rgcenter/health/dd122_ drugprices. pdf.

purchasing generic products.“ Generic drugs acquire, on

average, 44 percent of sales from bioequivalent brand name

drugs during the first year after generic entry.” Timely

availability of these products is key; each day that generics are

illegally kept out of the market represents miliions of dollars in

unwarranted overcharges for consumers and government

payors. In 1994 alone, consumers saved between $8-10 billion

by purchasing generic versions of brand name drugs.”

The prompt availability of generic alternatives is

increasingly important as more and more states enact laws and

promulgate regulations mandating generic substitution,

pharmaceutical formularies and preferred drug lists,”’ and

institute supplemental pharmaceutical assistance programs to

provide affordable access to prescription drugs for their

citizens.”* At the federal level, expedited access to generic drugs

* See U.S. Food and Drug Administration, Savings from Generic

Drugs Purchased at Retail Pharmacies (May 3, 2004).

° See Congressional Budget Office, How Increased Competition

from Generic Drugs Has Affected Prices and Returns in the

Pharmaceutical Industry, xii (July 1998) (“CBO 1998”).

* See CBO 1998 at ix.

* The enforcement of state laws designed to promote the utilization

of generic drugs is further frustrated by the Eleventh Circuit’s

decision. See e.g., National Conference of State Legislatures, 2005

Prescription Drug State Legislation Mid-Year Edition: August 15,

2005, available at http://www.ncsl.org/programs/health/

drugdisc05.htm (NCSL 2005 Prescription Drug State Legislation”)

* As of May 2005, at least 39 states have established or authorized

some type of program to provide pharmaceutical coverage or

assistance, primarily to the low-income elderly or to persons with

disabilities who do not qualify for Medicaid. See NAAG Presidential

Initiative Report at p. 93; NCSL 2005 Prescription Drug State

takes on an even greater fiscal urgency es the country finalizes

plans to provide Medicare beneficiaries with drug benefits in

January 2006 under the Part D program.” If generic drugs are

not made available in the manner intended by Hatch- Waxman,

these already costly government programs may quickly become

cost-prohibitive.

The need for the Court's guidance is crucial and the FTC’s

petition comes at a critical time. Many expensive brand name

drugs--at least 60 percent of the fifty top-selling brands--are

currently facing patent challenges from generic competitors as

contemplated and, indeed, encouraged by Hatch- Waxman.” The

Eleventh Circuit's decision, however, frustrates the statute’s

Legislation.

? See Medicare Prescription Drug, Improvement, and Modernization

Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066.

* For example, eighteen of the thirty top-selling brand name

prescription drugs are subject to patent challenges by generic

competitors. Manufacturers of Lipitor, Effexor-XR, Plavix,

Celebrex, Neurontin, Protonix, Norvasc, Zyprexa, OxyContin,

Fosamax Risperdal, Zoloft, Zocor, Pravachol, Actos, Aciphex,

Levaquin and Lovenox have all received abbreviated new drug

application paragraph IV certifications from generic drug

competitors challenging the validity and/or enforceability of the

brand name drugs’ patent protection. See, e.g, NDC Health

Corporation, The Top 200 Prescriptions for 2004 by U.S. Sales

(Mar. 2005) available at http://www.ndchealth.com/press_center/

uspharamaindustrydata.asp; FDA Center for Drug and Evaluation

and Research, Paragraph [V Patent Certifications as of August 15,

2005, U.S. Food & Drug Administration, (created Feb. 16, 2005,

updated August 15, 2005) available at http://www.fda.gov/cder/

ogd/ppiv. htm

intent by articulating a test that not only discourages generic

entry, but also promotes unwarranted extension of patent rights

and the division of monopoly profits by pharmaceutical

companies, at the expense of American consumers. The Court’s

analysis is needed to ensure that the provisions of Hatch-

Waxman, both those that promote innovation by protecting

patent rights, as well as those that accelerate generic

competition, are not circumvented by errors in judicial

interpretation.

iil. THE PUBLIC INTEREST IS DISSERVED BECAUSE

THE ELEVENTH CIRCUIT’S DECISION

DISCOURAGES ANTITRUST SCRUTINY OF

PATENT SETTLEMENT AGREEMENTS.

Antitrust enforcers, patent infringement litigants and the

courts agree that “public policy wisely encourages settlements”

of legal disputes. McDermott Inc., v. AmClyde, 511 U.S. 202,

215 (1994). Patent litigation, particularly in areas involving

compiex technical issues like those involved in the pharma-

ceutical industry, is extremely expensive for the parties and

burdensome for the courts. When a legal dispute is pursued

through trial, the expenses of litigation are passed on to the

public in the form of increased prices of products and services

provided by both parties. In the ideal case, settlement avoids

these costs and allows the parties in pharmaceutical patent

disputes to focus on ways of inventing, producing and marketing

new medications, for the benefit of the public.

However, not all settlements are actually in the public

interest. Lf the patent settlement results in an unlawful extension

of monopoly rights, the public interest requires challenging that

settlement under the antitrust laws. In reviewing the FTC’s

antitrust challenge of the patent infringement settlements at issue

in this case, the Eleventh Circuit devised a three-part test that

mandates an examination of: (1) the scope of the exclusionary

potential of the patent; (2) the extent to which the agreements

exceed that scope; and (3) the resulting anticompetitive effects.

Schering-Plough v. Federal Trade Commission, 402 F.3d 1056,

1066 (11" Cir. 2005). This test not only vitiates the purported

benefit to the public from the patent settlement (i.e., avoidance

of lengthy and expensive trial and concomitant increase in the

price of pharmaceutical products), but also deters enforcement

of the antitrust laws to the further detriment of the public good.

In order to prove an antitrust challenge, an antitrust prosecutor

or plaintiff must first prove the invalidity and/or noninfringe-

ment of the underlying patent. The Eleventh Circuit’s decision

disserves both the public interest favoring settlement of legal

disputes and the public interest in ensuring compliance with the

antitrust laws.

Although the Eleventh Circuit does not expressly advocate

a post hoc analysis of patent validity and/or infringement, that is

precisely what its three-part approach requires. The Eleventh

Circuit has erroneously extended the statutory presumption of

validity of the patent*' to an unprecedented and unwarranted

presumption of infringement of that patent. The Eleventh

Circuit’s decision reassigns the burdens of proof (1) from the

generic challenger to the government to show that the patent is

invalid; and (2) from the patent owner to the government to

* 35 US.C. §282.

show that the patent is not infringed,” before any settlement of

the patent challenge may be scrutinized under the antitrust

laws.” According to the Eleventh Circuit, if antitrust enforcers

do not rebut those presumptions by showing invalidity of the

patent and/or that the patent litigation was a sham, then the scope

of the exclusionary potential of the patent is deemed to be that of

the patent, had it been judicially determined valid and infringed.

id. at 1068. In other words, if the patent is presumed valid and

infringed, and the antitrust enforcer fails to prove otherwise, then

the exclusionary potential is the full term and scope of the

patent, and a division of monopoly profits between the patent

owner and the generic challenger is deemed justified as within

those parameters. Jd. at 1074-76. The illogic of this circular

reasoning is manifest in Jn re Ciprofloxacin Hydrochloride

Antitrust Litigation, 363 F. Supp. 2d 514 (E.D.N.Y. 2005),

where the district court, relying in large part on the Eleventh

Circuit’s analysis, expressly concluded that reverse payments

are legal, and also tacitly concluded that the weaker the patent

* The Eleventh Circuit erroneously stated that “Schering obtained

the legal right to exclude Upsher and ES] from the market until they

proved either that the ‘743 patent was invalid or that their products...

did not infringe Schering’s patent.” See 402 F.3d at 1066-67. The

correct burden of proof in a patent dispute is upon the patentee to

show by a preponderance of the evidence that a competitor’s

product infringes his patent. See, e.g., Kegel Co., Inc. v. AMF

Bowling, Inc., 127 F.3d 1420, 1425 (Fed. Cir. 1997),

*® This analysis assumes that the Eleventh Circuit would even permit

the antitrust enforcer to rebut the twin presumptions of validity and

infringement; Valley Drug can be also read to exclude any post hoc

determinations except in cases of fraud or sham litigation. See

Valley Drug, 344 F.3d at 1309.

owner believes his patent to be, the more he is willing to pay a

competitor not to challenge it. /d. at 534.

If the patent infringement dispute must be litigated as a

prerequisite to any attempt to define the parameters of the

patent’s authority to exclude, then any efficiencies realized as a

result of the patent settlement would inure, if at all, only to the

parties to the settlement.” Moreover, if the antitrust plaintiff

must first prove invalidity and/or noninfringement, many

unlawfully anticompetitive settlements will go unchallenged.

The appropriate analysis of an antitrust challenge of a patent

infringement settlement, therefore, assesses the strength of the

patent in the context of the infringement settlement itself. This

is true regardless of whether the settlement includes a reverse

payment and regardless of whether reverse payments are deemed

per se illegal. Underlying this analysis is the question whether,

given the terms of the settlement, it is more likely than not that

the patent would have been found (1) invalid and/or

unenforceable; or (2) valid and enforceable, but not infringed.

In such an analysis, the presence of a reverse payment is but one

indicator of the strength or weakness of the patent at issue.

Thus, if a patent settlement includes a substantial payment to the

generic challenger, “absent proof of other offsetting

consideration, it is logical to conclude that the quid pro quo for

* Ironically, the Eleventh Circuit relied upon the public policy

preference for settlement of legal disputes, citing the benefits of c ost

savings to the parties and to the public when it articulated its

antitrust test. The Eleventh Circuit's test requires litigation of the

patent dispute in any cvent, resulting in cost savings to no one. 402

F 3d at 1072-73, 1075.

the payment was an agreement by the generic to defer entry

beyond the date that represents an otherwise reasonable litigation

compromise.”*’ Further, a patent settlement that resolves a

dispute with money rather than with time” would indicate a

relatively weak patent claim and the more substantial the

payment, the weaker the patentee’s case is likely to be.”’

* See FTC Petition for a Writ of Certiorari at p.18. (“FTC Pet.”)

* As the FTC noted in its Petition, patent settlements permitting

earlier generic entry instead of payment to the generic challenger are

beneficial or at least neutral to purchasers of prescription drugs. See

FTC Pet. at p.18. The States do not advocate that patent settlements

are improper unless they benefit the public, but rather that the

Eleventh Circuit’s ruling erroneously approves settlements that

directly thwart the public interest.

” Judicial tests based upon probability are well-established in many

areas of the law, including intellectual property and antitrust. For

example, preliminary injunctions, frequently applicable to patent

infringement disputes, require a showing of probable success on the

merits. See, e.g., Amazon.com, Inc. v. BarnesandNoble.com, Inc.,

239 F.3d 1343, 1350 (Fed. Cir. 2001). Clayton Act merger

challenges also rely on probability, i.e., the challenger carries a

burden * proving a reasonable probability that the transaction would

substantially lessen competition. See, e.g, 15 U.S.C. §18; Brown

Shoe Co. v. United States, 370 U.S. 294, 323 (1962). Proof of

negligence takes into account the gravity of the harm, discounted by

its improbability, and balances that against the burden of adequate

precaution. See, e.g., Red Star Towing & Transportation Co. v.

Woodburn, 18 F. 2d 77 (2d Cir. 1927). In environmental cases,

remedial orders essentially weigh the probability and severity of

imminent and substantial endangerment within the meaning of 42

U.S.C. §§ 6973, 9606 against the costs of fixing the problem. See,

e.g., United States v. Seymour Recycling Corp., 554 F Supp 1334,

1337-38 (D. Ind. 1982).

The Eleventh Circuit failed to provide a reasoned analysis

that would permit antitrust scrutiny of patent settlements, short

of trial on the merits of the underlying patent dispute. Such

analysis misconstrues and misallocates the appropriate burdens

of proof. Moreover, in so doing, it countermands any societal

benefit inherent in the policy favoring settlement of legal

disputes in the first instance and discourages fair and efficient

enforcement of the antitrust laws. Both results run counter to the

public interest and disrupt the appropriate balance struck by

Congress between enforcement of intellectual property nights and

enforcement of the antitrust laws.

CONCLUSION

For the reasons stated, the Federal Trade Commission’s

petition for a writ of certiorari should be granted.

Respectfully submitted,

J. JOSEPH CURRAN, JR.

Attorney General of Maryland

ELLEN S. COOPER*

Chief of Antitrust Division

MEREDYTH_SMITH ANDRUS

Assistant Attorney General

200 St. Paul Place

Baltimore, Maryland 21202

(410) 576-6470

*Counsel of Record Attorneys for State of Maryland

MOTION FILED FZ

SEP 3 0 AE ez,

No. 05-273

IN THE

Supreme Court of the United States

FEDERAL TRADE COMMISSION,

Petitioner,

SCHERING-PLOUGH CORPORATION, et ai.,

Respondents.

On Petition For A Wait oF CERTIORARI TO THE

Unirep States Court or APPEALS

FoR THE ELEVENTH CircuirT

—l Es

MOTION OF THE NATIONAL ASSOCIATION OF

CHAIN DRUG STORES AND BRIEF OF AMICUS CURIAE

IN SUPPORT OF PETITIONER

DONALD Bett

Counsel of Record

Mary ELven FLeck

NATIONAL ASSOCIATION

or CHAIN Druc Stores

413 North Lee Street

P.O. Box 1417-D49

Alexandna, VA 22313-1480

(703) 549-3000

Attorneys for Amicus Curiae

——e-

197007 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

MOTION FOR LEAVE TO FILE

BRIEF OF AMICUS CURIAE

The National Association of Chain Drug Stores

(“NACDS”) hereby moves, pursuant to Supreme Court Rule

37.2, for leave to file a brief as amicus curiae in support of

the petition for a writ of certiorari to the United States Court

of Appeals for the Eleventh Circuit. Petitioner Federal Trade

Commission has consented to the filing of this brief,

but respondents Schering-Plough and Upsher-Smith

have declined to consent. A copy of the proposed brief is

attached.

NACDS is an association of nearly 200 retail pharmacy

chains. NACDS members operate more than 36,000 retail

community pharmacies and dispense approximately 70%

of Americans’ prescription drugs. NACDS members and

their customers are directly affected by the anticompetitive

practices challenged in this case because those practices

maintain artificially high prices for prescription drugs.

Accordingly, NACDS is uniquely positioned to address the

effect of those anticompetitive practices and to aid the Court

in considering the Petition.*

The FTC decision at issue here applied well-established

economic principles to the real marketplace facts that were

confronting the parties to the patent litigations at the time

of their agreements. The payments from Schering to Upsher

and ESI must have reduced competition to a level below

that expected (absent the payments) by both Schering and

those patent challengers. Otherwise, the challengers would

not have required those payments in settlement, and

Schering would not have made them. The FTC's competitive

baseline, against which it measured the amount of

— —— ——e —

* Over the past few years, NACDS has filed amicus briefs in several

cases involving similar issues. including the appeals in In re Cardizem

CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003), and Valley Drug Co

v. Geneva Pharmaceuticals, inc., 350 F.3d 1181 (11th Cir. 2003), and in the

administrative proceedings in this case

competition that the settlement agreements actually

provided, was the amount of competition that the parties

themselves expected (i.¢., their views of the probability-

adjusted amount of competition). That competitive baseline

is consistent with that long used by the Courts to determine

the legality of intellectual property settlements. See, ¢.g.,

Standard Oil Co. (Ind.) v. United States, 283 U.S. 163, 171

(1931); United States v. Singer Mfg. Co., 374 U.S. 174, 199

(1963) (White, J., concurring); Aronson v. Quick Point Pencil

Co., 440 U.S. 257, 265 (1979); Clorox Co. v. Sterling Winthrop,

Inc., 117 F.3d 50, 60-61 (2d Cir. 1997).

In contrast, the Court of Appeals panel's competitive

baseline was based on the formalistic, and erroneous,

proposition that “Schering obtained the legal right to

exclude Upsher and ESI from the market until they proved

either that the ‘743 patent was invalid or that their products

... did not infringe Schering’s patent.” Pet. App. 18a. The

Court of Appeals erred as to who has the burden of proving

both infringement and (at least on the facts of this case)

validity. And the whole notion of premising an antitrust

analysis on legal presumptions rather than on an economic

analysis of real marketplace facts turns back the clock on

the progress that antitrust analysis has made in the last 30

years. Premising the antitrust analysis on this particular

legal presumption — the rebuttable presumption of validity

— is particularly inappropriate because that presumption

is one small piece of a larger patent system in which patents

are issued ex parte and are subject to plenary review in the

courts. Courts find more than half of all litigated patents to

be invalid. In the pharmaceutical arena, Congress has not

only made court review plenary, but has offered a bounty

for successful generic challengers. The generic’s success rate

— despite the presumption relied on by the panel — is

greater than 70%. Thus, the panel's analysis, premised as it

is on one tiny aspect of the patent system, does not capture

the economic reality faced by the parties at the time that

they entered their agreements. Moreover, there is abundant

additional evidence that Congress never intended the

rebuttable presumption of validity to have the ironclad

exclusionary effect that the panel's decision would bestow

on it.

The Court should grant review of the panel decision

because it is deeply flawed. As a result of 15 U.S.C. § 45(c),

that decision, if left unreviewed, would disable the FTC

from enforcing the antitrust law against agreements that

threaten enormous consumer harm in this vitally important

segment of the economy

Moreover, the panel decision is at odds with that of the

Court of Appeals for the Sixth Circuit in /n re Cardizem CD

Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003), cert. denied,

125 S. Ct. 307 (2004). That Court adopted a competitive

baseline similar to that adopted by the FTC, holding that,

contrary to the panel decision here, a patent does not create

an “‘impenetrable’ legal impediment to [the generic

challenger’s] production and sale of its FDA-approved

generic product.” /d. at 914. If the real economic effect of a

patent were to provide such ironclad exclusion, then the

brand manufacturer “would not have paid [the generic

competitor] $89 million to effect what the patent and

infringement suit had already accomplished.” Id. at 915.

Unlike the FTC, the Sixth Circuit believes that such

exclusion payment agreements are so unlikely to ever confer

any procompetitive benefits that they should be condemned

as per se unlawful. Review by this Court is necessary to

ensure that the Eleventh Circuit's ruling — starkly at odds

with that of another circuit — does not dictate FTC

enforcement policy on this important issue.

NACDS respectfully requests that the Court grant leave

to file the attached amicus curiae brief in support of the

Petition.

Respectfully submitted,

DONALD BELL

Counsel of Record

Mary ELLen Fieck

NATIONAL ASSOCIATION

OF CHAIN Druc SToRES

413 North Lee Street

P.O. Box 1417-D49

Alexandria, VA 22313-1480

(703) 549-3000

Attorneys for Amicus Curiae

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES

STATEMENT OF INTEREST OF AMICUS CURIAE

BACKGROUND

ARGUMENT

lL THE COURTSHOULD GRANT REVIEW IN

ORDER TO CORRECT THE COURT OF

APPEALS FUNDAMENTAL ERRORS OF

LAW

I. THE COURT SHOULD GRANT REVIEW IN

ORDER TO RESOLVE A CONFLICT

BETWEEN THE CIRCUITS

CONCLUSION

Page

TABLE OF CITED AUTHORITIES

Cases:

Abbott Labs. v. Zenith Labs., inc., 934 F. SUPP. 925

DOR Te. FEUD cc cccccccccccccevccccescocses

American Bank & Trust Co. v. Federal Reserve Bank,

ED oceeceuseeccesouscuvessas

Andrx Pharm., Inc. v. Biovail Corp. Int'l, 256 F.3d 799

Tie GREED Ov ce eneseuecesoeeseceesovess

Aronson v. Quick Point Pencil Co., 440 U.S. 257 (1979)

ee ee

Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472

U.S. 585 (1985) ...... pavenseeveecuredéecuceses

Astra Aktiebolag v. Andrx Pharm., 222 F. Supp. 2d 423

CREME ocvesconcccenevccnevcnéaceess

Brooke Group Ltd. v. Brown & Williamson Tobacco

Corp., 509 U.S. 209 (1993) ..... 6.6665. jeduest

In re Buspirone Patent Litig., 185 F. Supp. 2d 363

GRENSON bcnsccowcdbrctcecvessavesess

In re Cardizem CD Antitrust Litig. 332 F.3d 896 (6th

Cir. 2003), cert. denied, 125 S. Ct. 307 (2004) .....

Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83

SE 6déecberessavbubseeseveccesousbenechs

CS od eee eee

ili

Cited Authorities

Clorox Co. v. Sterling Winthrop, Inc., 117 F.3d 50

fe he errr er ee

Eli Lilly & Co. v. American Cyanamid Co., No. IP 95-

536-C, 2001 U.S. Dist. LEXIS 212 (S.D. Ind. Jan. 8,

BOOED cvcecccvacessoevecbosscaceensauweennn

Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1

er a Wate Se ay

FTC v. GlaxoSmithKline, 202 F.R.D. 8 (D.D.C. 2001)

eevuvneen evn eevnewneeeeeeneneeeneneeneeeeneeneereeeeeee ee ee

Garot Anderson Agencies, Inc. v. Blue Cross & Blue

Shield United, 1993 U.S. Dist. LEXIS 3446, 1993-1

Trade Cas. 4 70,235 (N.D. Ill. Feb. 26, 1993) ....

Harries v. Air King Products Co., 183 F.2d 158 (2d Cir.

GREED coccescceseecdescussauacderetcenn

Illinois Tool Works, Inc. v. Grip-Pak, Inc., 906 F.2d 679

Re Be Per ee ee

Lorain Journal Co. v. United States, 342 U.S. 143 (1951)

Microbix Biosystems, Inc. v. Biowhittaker, Inc., 172

F. Supp. 2d 680 (D. Md. 2000) ...... 6... cee

Mylan Pharms., Inc. v. Thompson, 139 F. Supp. 2d 1

(D.D.C.), rev'd, 268 F.3d 1323 (Fed. Cir. 2001) ...

Nutrition 21 v. United States, 930 F.2d 867 (Fed. Cir.

SUUGE ecstcveessévenvadnn pa awad wean |

Page

Cited Authorities

Page

In re Omeprazole Patent Litig., 84 Fed. Appx. 76 (Fed.

DM 904 ondeureeddoseeeechueenuaeseuak 5

Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990) .. 8

Pharmachemie B.V. v. Barr Labs., Inc., 276 F.3d 627

lle eer suweseeees ones 3

Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552 _—

DD ecccéccsecoucesecseares 15

SCM ‘aha v. Xerox ee 645 F.2d none Cir. 1981)

TUTITTILITITTTTTTTTTiTiirsrrerrrr errr TTT? 6

SmithKline Beecham Corp. v. Apotex Corp., 247

F. Supp. 2d 1011 (N.D. Ill. 2003) .............. 5

SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d

Bee Oe. Gi. SOUND cccvcecceccecccccsevcses 5

Spiegel, Inc. v. Federal Trade Comm'n, 494 F.2d 59

(7? Cie. BOVED coccccccces PTTTTTTTITIT TT TTT 9

Standard Oil Co. (Ind.) v. United States, 283 U.S. 163

ERODED cvccccccoes pocereuveces TTTTT . 10,11

United States v. Addyston Pipe & Steel Co., 85 F. 271

(6th Cir. 1898), aff'd, 175 U.S. 211 (1899) ..... 8

United States v. Microsoft Corp., 253 F.3d 34 tin ..

Cir. 2001) .. | 9

United States v. Singer Mfg. Co., 374 U.S. 174 (1963)

Cited Authorities

Statutes:

21 U.S.C. § 355 (i)(SMBYili) .. 6... ee eee

21 U.S.C. § 355G)(SBYiv) . 2.6... cece cece eens

I I ici suas cacccsucdsuuavucesconns

Medicare Prescription Drug, Improvement, and

Modernization Act of 2003,

Pub. L. No. 108-173, 117 Stat. 2066 ............

Other Authorities:

Abbott Labs. and Geneva Pharms., No. C-3945, (FTC

Mar. 16, 2000) (Statement of Chairman Robert

Pitofsky and Commissioners Sheila F. Anthony,

Mozelle W. Thompson, Orson Swindle and

Thomas B. Leary), available at http:/ / www ftc.

gov/ os /2000/03/hoeschtandrxcommstmt htm

Theresa Agovino, Drug Patents Gets Attention of

Regulators, Prrr. Post-Gazerre, Jan. 24, 2002 ....

John R. Allison & Mark A. Lemley, Empirical

Evidence on the pd of —— Patents, 26

AIPLA QJ. 185 (1998) .......... toms

AstraZeneca PLC, First Quarter Results 2003, available

at http:/ /www.astrazeneca.com/sites/7/

imagebank/ migratedpress /q12003narrative.pdf

ew eveeeeeveenevneeeeeeneeeeeneneneeeneeeneneeeneeeeeeeee

Page

Cited Authorities

Page

Comment of the Generic Pharmaceutical Ass‘n in

Support of Citizen Pet., FDA Docket No. 2004P-

0075/ CP 1 (filed May 21, 2004), available at http:/

/www .fda.gov/ohrms/dockets/dailys/04/

june04/ 060404 /04p-0075-c00003-voll .pdf

146 Conc. Rec. E1538-02 (daily ed. Sept. 20, 2000) ... 16

146 Conc. Rec. $7908-01 (daily ed. July 27, 2000) . 17

147 Conc. Rec. $3711 (daily ed. Apr. 6, 2001) .. le

148 Conc. Rec. $7348 (daily ed. July 25, 2002) 17

148 Conc. Rec. $7460 (daily ed. July 29, 2002) ...... 17

148 Conc. Rec. $7566 (daily ed. July 20, 2002) a 16

Robert T. Cootner and Daniel L. Rubinfeld, Economic

Analysis of Legal Disputes, 27 J. of Econ. Lrr. 1067

(1989) 10

Feperat TrRape COMMISSION, AGREEMENTS FILED WITH

tHe Feperat Trade COMMISSION UNDER THE

Mepicaio Prescrirprion Druc, IMPROVEMENT, AND

MODERNIZATION Act oF 2003 (Jan. 2005) = 3

Feperat Treape Commission, Generic Dreuc ENTRY

Prior TO Patent Expiration: An FTC Srupy (July

2002) 3

vil

Cited Authorities

Page

Feperat TRADE COMMISSION, TO PROMOTE INNOVATION:

THe Proper BALANCE OF COMPETITION AND PATENT

FTC Investigates Replacement of Branded Rx With

Similar Versions, FDA Week, Sept. 2, 2005 ...... 2

Richard J. Gilbert & Willard R. Tom, Is Innovation

King at the Antitrust Agencies? The Intellectual

Property Guidelines Five Years Later, 69 ANTITRUST

Ree GP GEOED cucccevesccuseccccsusessocccess 7

Herbert Hovenkamp et al., Anticompetitive

Settlement of Intellectual Property Disputes, 87

Minn. L. Rev. 1719 (2003) ......... cee eeee 10, 11,13

XI Herbert Hovenkamp, AntiTrust Law 4 1901 (1998)

SeONe bused etn ees bees Kee uedvesesescées thanee 6

XII Herbert Hovenkamp, Antrrrust Law 4 2030b (1999)

WTTTTTT TTT TT TTL TT TTT TTiTTTi rir ieee 8

Herbert Hovenkamp et al., Balancing Ease and

Accuracy in Assessing Pharmaceutical Exclusion

Payments, 88 Minn. L. Rev. 712 (2004) ......... 18

Susan Jaffe, Medicaid Hopes to Save Millions With

Generic Pill, CLeveLAND PLAIN Deacer, Dec. 14,

BEE Vecccccnsecsncvescetccocacesesteeseess 4

William M. Landes, An Economic Analysis of Courts,

BEF. Ue BOON. GE IGT E) occ ccccccesvecccccens 10

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