FTC Pursues Antitrust Case Against Barr Laboratories

by Aaron F. Barkoff



Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia recently denied Barr Laboratories' (BRL) motion to dismiss a Federal Trade Commission lawsuit stemming from Barr's agreement with Warner Chilcott concerning generic Ovcon 35. The opinion is available here.

In 2001, Barr Labs filed an ANDA for a generic version of Warner Chilcott's oral contraceptive Ovcon 35, an older product no longer protected by patents. Barr appeared to be close to receiving final approval from the FDA in late 2003. Faced with losing a substantial amount of revenue to generic competition, Warner Chilcott agreed to pay Barr $20 million not to launch its generic product until five years after approval.

The FTC responded by filing suit against both Warner Chilcott and Barr, alleging unfair methods of competition in violation of Section 5 of the FTC Act. In its complaint, the FTC described the agreement between Warner Chilcott and Barr as a "horizontal agreement not to compete," which "on its face eliminates competition and has no plausible procompetitive justification," and is therefore "a naked restraint of trade." The FTC sought an order enjoining Warner Chilcott and Barr from operating under their agreement, preventing the defendants from engaging in "similar and related conduct" in the future, and granting "such other equitable relief as the Court finds necessary to redress and prevent recurrence of defendants' violation of Section 5(a) of the FTC Act."

Last September, Warner Chilcott waived the exclusivity provisions of its agreement with Barr, which had prevented Barr from introducing its generic Ovcon 35. Shortly thereafter, Barr launched its generic product. Then, as we previously reported, Warner Chilcott reached a settlement with the FTC requiring Warner Chilcott "to refrain from entering into similar agreements in the future." Barr, however, did not settle with the FTC. Instead, Barr filed a motion to dismiss the FTC's complaint as moot.

Barr argued that the case was moot for three reasons: (1) Warner Chilcott waived the exclusivity provisions of its agreement with Barr; (2) Barr launched its generic Ovcon 35 product; and (3) Warner Chilcott agreed not to enter into similar future agreements with Barr. The FTC opposed Barr's motion on grounds that its complaint sought not only to enjoin Warner Chilcott and Barr from operating under their non-competition agreement, but also to prevent Barr from engaging in "similar and related conduct" in the future.

Judge Kollar-Kotelly rejected Barr's assertion that "there can be no reasonable expectation that the conduct at issue will be repeated," finding that "while Warner Chilcott may be enjoined from entering into similar agreements in the future, Barr--who did not enter into a settlement agreement with the FTC and is not bound by [Warner Chilcott's settlement]--faces no such constraint. Barr thus remains free to enter into the very type of agreement that the FTC would seek to enjoin through a permanent injunction." Additionally, Judge Kollar-Kotelly noted that "Barr has thus far maintained that the exclusivity provisions of [its agreement with Warner Chilcott] are entirely lawful, and courts have found cases not to be moot where, as here, defendants have insisted upon the legality of the challenged practices."

Thus, the FTC appears to be pressing ahead with its case against Barr, seeking to permanently enjoin Barr from entering agreements "similar and related" to the one it reached with Warner Chilcott.

NOTE: Thanks to Kurt Karst for providing a copy of the opinion.


(This article was published by BioHealth Investor with permission of Aaron F. Barkoff, author of OrangeBookBlog.com)


RELATED READING:
- Abbott Labs Under Scrutiny for Alleged Antitrust Violations
- FTC Commissioner Blasts "Reverse Payment" Agreements
- Celgene’s Day in Court With Barr Coming Soon
____________________