Overview of Ftc Actions in Pharmaceutical Products and Distribution*
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OVERVIEW OF FTC ACTIONS IN PHARMACEUTICAL PRODUCTS AND DISTRIBUTION* Health Care Division Bureau of Competition Federal Trade Commission Washington D.C. 20580 Markus H. Meier Assistant Director Bradley S. Albert Deputy Assistant Director Kara Monahan Deputy Assistant Director August 2020 * Actions involving health care services and products are contained in a separate document, Overview of FTC Actions in Health Care Services and Products. Information about advisory opinions in the health care and pharmaceutical sectors is contained in the document Topic and Yearly Indices of Health Care Antitrust Advisory Opinions by Commission and by Staff. TABLE OF CONTENTS I. INTRODUCTION ...............................................................................................................1 II. CONDUCT INVOLVING PHARMACEUTICAL PRODUCTS .......................................3 A. Monopolization ........................................................................................................3 B. Agreements Not to Compete ..................................................................................15 III. CONDUCT INVOLVING PHARMACEUTICAL DISTRIBUTION ..............................20 A. Monopolization ......................................................................................................20 B. Agreements on Price and Price-Related Terms .....................................................21 C. Agreements to Obstruct Innovative Forms of Health Care Delivery or Financing................................................................................................................27 IV. MERGERS INVOLVING PHARMACEUTICAL PRODUCTS .....................................27 A. Horizontal Mergers between Direct Competitors ..................................................27 B. Potential Competition Mergers ..............................................................................63 C. Innovation Market Mergers ...................................................................................71 V. MERGERS INVOLVING PHARMACEUTICAL DISTRIBUTION ..............................73 A. Horizontal Mergers between Direct Competitors ..................................................73 B. Vertical Mergers ....................................................................................................77 VI. INDUSTRY GUIDANCE STATEMENTS INVOLVING PHARMACEUTICAL PRODUCTS AND DISTRIBUTION ................................................................................78 A. Advisory Opinions .................................................................................................78 B. Citizen Petition to the Food and Drug Administration ..........................................78 C. FTC Amendments to the Premerger Notification Rules Related to the Transfer of Exclusive Patent Rights in the Pharmaceutical Industry ....................79 D. 2004 Report: Improving Health Care: A Dose of Competition .............................79 VII. AMICUS BRIEFS INVOLVING PHARMACEUTICAL PRODUCTS AND DISTRIBUTION................................................................................................................80 A. Reverse Payment ....................................................................................................80 B. Market Definition...................................................................................................85 C. Product Hopping ....................................................................................................86 i D. Restricted Distribution/REMS ...............................................................................87 E. Patent Issues ...........................................................................................................88 F. Noerr-Pennington Doctrine ....................................................................................90 G. Regulatory Issues ...................................................................................................91 VIII. INDEX - TABLE OF CASES AND BRIEFS ...................................................................93 ii FTC ACTIONS IN PHARMACEUTICAL PRODUCTS AND DISTRIBUTION1 I. INTRODUCTION The Federal Trade Commission is a law enforcement agency charged by Congress with protecting the public against anticompetitive behavior and deceptive and unfair trade practices. The FTC’s antitrust arm, the Bureau of Competition, is responsible for investigating and prosecuting “unfair methods of competition” which violate the FTC Act. The FTC shares with the Department of Justice responsibility for prosecuting violations of the Sherman Act and the Clayton Act. When litigation becomes necessary, the FTC may conduct an administrative adjudication before an FTC Administrative Law Judge. This provides the opportunity for matters raising complex legal and economic issues to be heard, in the first instance, in a forum specially suited for dealing with such matters. Appeals from Commission decisions are taken directly to the federal courts of appeal. The Commission also has the authority under Section 13(b) of the FTC Act to seek a preliminary injunction in federal district court whenever the Commission has reason to believe that a party is violating, or is about to violate, any provision of law enforced by the FTC. Such preliminary injunctions are intended to preserve the status quo, or to prevent further consumer harm, pending administrative adjudication before the Commission. Additionally, the Commission has the authority to seek a permanent injunction in federal district court in a “proper case” pursuant to section 13(b) of the FTC Act. In the mid-1970's, the FTC formed a division within the Bureau of Competition to investigate potential antitrust violations involving health care. The Health Care Division consists of approximately 40 lawyers and investigators who work exclusively on health care antitrust matters, including non-merger matters involving the pharmaceutical industry. The Mergers I Division investigates mergers involving pharmaceutical products. FTC actions involving pharmaceutical products and distribution2 are summarized below.3 The summaries are intended to provide a brief overview of FTC enforcement actions. They do not reflect all subsequent actions taken by the Commission or the parties. The Commission and its staff have also 1 This summary has been prepared by the FTC Health Care Division staff, and has not been reviewed or approved by the Commission or the Bureau of Competition. Section IV describes FTC enforcement involving mergers in the pharmaceutical industry, which are primarily conducted by the Mergers I Division of the Bureau of Competition. 2 Actions involving health care services and products are contained in a separate document, Overview of FTC Actions in Health Care Services and Products, https://www.ftc.gov/tips-advice/competition-guidance/industry- guidance/health-care. 3 Commission complaints and orders issued since March 1996 are available at the FTC’s website at http://www.ftc.gov/tips-advice/competition-guidance/industry-guidance/health-care (under the “Cases” drop down menu). 1 responded to numerous requests for guidance from health care industry participants through, among other things, the advisory opinion letter process.4 For further information about matters handled by the FTC’s Health Care Division, or to lodge complaints about suspected antitrust violations, please write, call, e-mail,5 or fax this office as follows: Mailing Address: Health Care Division Bureau of Competition Federal Trade Commission Washington, DC 20580 Telephone Number: (202)-326-3759, (202)-326-3670, or (202)-326-2018 E-Mail: [email protected] Fax Number: (202)-326-3384 For further information about pharmaceutical mergers handled by the FTC’s Mergers I Division, please write, call, e-mail, or fax the Mergers I Division as follows: Mailing Address: Mergers I Division Bureau of Competition Federal Trade Commission Washington, DC 20580 Telephone Number: (202)-326-3106, (202)-326-3506, or (202)-326-2118 E-Mail: [email protected] Fax Number: (202)-326-2655 4 Information regarding advisory opinions is set forth in the Topic and Yearly Indices of Health Care Advisory Opinions by Commission and by Staff. The indices, the advisory opinions, and other information relating to the Commission’s advisory opinion program are also available at the FTC’s website at http://www.ftc.gov/tips- advice/competition-guidance/industry-guidance/health-care. 5 Note that e-mail is not secure. Confidential information should be marked “Confidential” and sent via regular mail. To learn how we may use the information you provide, please read our Privacy Policy. 2 II. CONDUCT INVOLVING PHARMACEUTICAL PRODUCTS A. Monopolization Federal Trade Commission, et al. v. Vyera Pharmaceuticals, LLC, et al., No. 20-cv-00706, FTC File No. 161-0001 (complaint issued January 27, 2020; amended complaint filed on April 14, 2020) (https://www.ftc.gov/news-events/press-releases/2020/04/six-more-states-join-ftc-ny- attorney-generals-case-against-vyera). On January 27, 2020, the FTC filed a complaint jointly with the State of New York alleging an elaborate anticompetitive scheme by Vyera Pharmaceuticals, LLC, its parent company Phoenixus AG, its founder Martin Shkreli, and its former CEO Kevin Mulleady to preserve a monopoly for the life-saving drug Daraprim. On April 14, 2020, the FTC and New York filed an amended complaint adding six additional state plaintiffs—California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia.