Competitive Edge: New Law Requires Pharmaceutical Companies to Notify Agreements with the U.S. Antitrust Regulators

The U.S. Federal Trade Commission (FTC) published a notice that, effective January 7, 2004, pharmaceutical companies must now file certain agreements with the FTC and the U.S. Department of Justice (DOJ) within 10 business days of the execution of the agreement.  This new law, which is part of Title XI of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, establishes a new mandatory notification process for certain agreements between brand-name and generic pharmaceutical companies active in the U.S.

The new law requires pharmaceutical companies to file two categories of agreements with both the FTC and DOJ.  First, pharmaceutical companies must file with the U.S. antitrust agencies any agreement between a brand- name pharmaceutical company and a generic drug manufacturer regarding the manufacture, marketing and sale of generic versions of brand-name drug products, where the generic has previously submitted an Abbreviated New Drug Application (ANDA), certifying that the patents covering the brand-name pharmaceutical are either invalid or are not infringed.  Second, agreements between generic pharmaceutical manufacturers, each of which has filed an ANDA for a generic equivalent of the same branded drug, must be filed with the antitrust agencies if the agreement relates to the 180-day exclusivity period.  In addition, pharmaceutical companies may also have to file other related or contingent agreements.  Companies must file within 10 business days of the execution of the agreement or prior to the date of commercial marketing, if that is less than 10 days after the execution of the agreement.  Failure to meet the filing deadline could result in a civil penalty of up to $11,000 per day.

As a result of this new law, all pharmaceutical companies must be particularly careful about entering into any agreement of the type noted above.  The FTC has been particularly aggressive over the last several years in bringing enforcement actions involving patent settlement agreements between brand- name and generic manufacturers.  Because most settlement agreements between brand-name and generic pharmaceutical manufacturers must now be notified to the FTC and DOJ, it is important that all pharmaceutical companies consult with antitrust counsel prior to entering into any such agreements. 

MWE's antitrust group can help pharmaceutical companies entering into such agreements determine whether antitrust risks exist and can help manage such risks.