PREVIEW-Top U.S. court to decide on deals to delay cheaper drugs

WASHINGTON, March 22 (Reuters) - The U.S. Supreme Court will hear arguments on Monday over whether big drug companies can settle patent litigation with generic rivals by making deals to keep cheaper products off the market.

U.S. and state regulators say the practice costs consumers, insurers and government billions of dollars annually.

The Federal Trade Commission, which has dubbed these arrangements "pay for delay," has fought them in court for more than a decade with mixed success, culminating in the case now before the Supreme Court.

"The continuing stream of monopoly profits is large enough to pay the generic competitors more than they could hope to earn if they entered the market at competitive prices," the FTC said in a brief.

At the same time, the brand-name manufacturer receives greater profits than it could earn in the face of generic competition, the regulatory agency argued.

The Justice Department, the European Union and more than two dozen U.S. state attorneys general view the deals as illegal, but drug companies defend them as a way to avoid potentially lengthy patent litigation.

"In every case that we've been in involved in that resulted in a settlement, it has resulted in years being taken off the patent life," added Paul Bisaro, chief executive of generic drug maker Actavis, Inc. Actavis was formerly Watson Pharmaceuticals.

"It's very unsophisticated to say 'Oh, they get paid a bunch of money to stay off the market,"' said Bisaro.

In the case before the court, Solvay Pharmaceuticals Inc, now owned by AbbVie, sued generic drug makers in 2003 to stop cheaper versions of AndroGel, a gel used to treat men with low testosterone.

These payments, as high as $30 million annually, went to rivals Watson, Paddock Laboratories Inc and Par Pharmaceutical Cos, and were intended to help Solvay preserve annual profits estimated at $125 million.

Under the deal, the three would stay off the market until 2015. The patent expires in 2020.

AbbVie was confident that it would win.

"The federal district and appellate courts have both previously ruled that the plaintiff's allegations lacked merit. We are confident that these decisions will be upheld," Adelle Infante, an AbbVie spokeswoman, said in a statement.

The Supreme Court is expected to issue a decision by the end of June.

AbbVie's arrangement is similar to the 40 deals made in the 2012 fiscal year, which ended on Sept. 30. That was up from 28 the previous year despite FTC efforts to stop them. The FTC said the agreements involved 31 different brand name drugs with total U.S. sales of more than $8.3 billion annually.

The FTC sued to stop the AndroGel arrangement, arguing that it was illegal under antitrust law because the companies divided up the market.

The FTC lost at the district court level and lost an appeal as well. But another appellate court has said the deals were illegal, prompting the Supreme Court to step in to resolve the split.

The FTC also sued Cephalon Inc, accusing it in 2008 of blocking a generic version of the anti-sleep drug Provigil. The case has been stayed pending the Supreme Court's decision.

In 2001 the FTC sued Schering-Plough Corp., later bought by Merck and Co Inc, because of payments to rivals to delay generic versions of its potassium supplement, K-Dur 20. The FTC lost that case.

But in a private case that also involved K-Dur, the U.S. Court of Appeals for the Third Circuit, in New Jersey, backed the FTC position and found the deals to be illegal.

BATTLES ON CAPITOL HILL, EUROPE

Opponents of pay-for-delay deals in the United States and Europe are not waiting for a high court decision, though.

Senator Amy Klobuchar, a Democrat from Minnesota and chairwoman of the Senate Judiciary Committee's antitrust panel, and Senator Chuck Grassley, a Republican from Iowa, introduced legislation in February to make the deals illegal.

Previous bills have failed in part because of opposition from the drug industry, both branded and generic.

In Brussels, EU regulators have eight investigations under way involving more than a dozen drugmakers. The European competition regulator says the deals violate antitrust law.

The decision will be made by an eight-member court. Justice Samuel Alito recused himself, without giving a reason.

The case is Federal Trade Commission v. Watson Pharmaceuticals Inc et al, U.S. Supreme Court, No. 12-416.

(Reporting By Diane Bartz; editing by Ros Krasny and Kenneth Barry)

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UPDATE 1-FDA rebuff deals big blow to Novo Nordisk's U.S. hopes

* FDA issues "complete response letter" for Tresiba, Ryzodeg

* Agency demands new clinical study on cardiovascular safety

* Novo CEO says "surprised and disappointed" by FDA move

* Novo shares expected to fall sharply on Monday

(Adds analyst comment, background)

COPENHAGEN, Feb 10 (Reuters) - U.S. regulators dealt a major blow to Novo Nordisk's hopes for its new long-acting insulin Tresiba by demanding the Danish drugmaker conduct additional clinical tests to assess potential heart risks.

Novo, the world's biggest insulin maker, said the U.S. Food and Drug Administration (FDA) had requested additional data from a dedicated cardiovascular outcomes trial before it would consider approving Tresiba and related product Ryzodeg.

The drugmaker - which is banking on Tresiba to keep it in the lead in diabetes care - said on Sunday it did not expect to be able to provide the data during 2013. Analysts said the FDA's stance could delay Tresiba until 2015 or 2016.

"They will have to make new studies and that will delay the launch of Tresiba in the U.S. by two to three years," Sydbank analyst Soren Hansen said.

"It is a really bad situation ... I expect the share will fall significantly on Monday."

The setback for Tresiba, also known as degludec, is good news for rival makers of insulin medicines, including France's Sanofi, whose Lantus product is under threat from Novo's newer ultra-long-lasting treatment.

Most investors had expected a green light from the U.S. watchdog, following a positive recommendation from an advisory panel to the FDA last November.

Optimism about Tresiba and Ryzodeg - which combines degludec with another formulation of insulin - was further boosted by approval in Europe, where the drugs won a final go-ahead last month. They have also been approved in Japan.

Tresiba and Ryzodeg have been widely tipped by analysts to become multibillion-dollar-a-year sellers worldwide.

CONFOUNDS EXPECTATIONS

The FDA's decision to issue Novo with a so-called "complete response letter" therefore confounded consensus expectations. Such letters are issued when the U.S. agency determines that an application cannot be approved in its existing form.

"We are surprised and disappointed to receive this letter, but we acknowledge this decision by the FDA and will work with the agency to determine the best path forward to completing the review," Novo Chief Executive Lars Rebien Sorensen said in a statement.

Concerns about the cardiovascular safety of Tresiba are not new, but Novo and most analysts had thought the issue had been resolved.

The FDA advisers meeting last year expressed concern about a trend toward higher incidence of adverse heart events with the new insulin than with older ones. However, the differences seen in 16 large clinical trials were not statistically significant.

In addition to calling for new trials on Tresiba's heart safety, the FDA said approval for Tresiba and Ryzodeg could not be granted until violations cited in a Dec. 12 warning letter had been resolved.

Novo said the FDA's decision not to grant approval at the present time was not expected to impact significantly its financial forecasts for the current year.

The big concern of investors, though, is that a lengthy delay in getting Tresiba launched in the world's biggest drugs market will seriously undermine Novo's ability to stay ahead of rivals such as Sanofi and Eli Lilly.

(Additional reportingby Ole Mikkelsen and Ben Hirschler; Editing by Maureen Bavdek and Dale Hudson)

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UPDATE 1-U.S. Senate to mull ban on 'pay for delay' pharmaceutical deals

* Branded, generic drug companies expected to oppose bill

* Similar measures failed in previous Congress

* Supreme Court has agreed to hear 'pay for delay' case

WASHINGTON, Feb 5 (Reuters) - Key Democratic and Republican senators reintroduced legislation on Tuesday that would make it illegal for brand-name pharmaceutical companies to pay generic drug makers to keep their cheaper medicines off the market.

Such deals, in which big drug companies resolve patent litigation with potentially infringing generic firms by reaching a settlement that delays a generic version of a drug in exchange for a payment, have angered U.S. and European antitrust enforcers for years.

The bill is sponsored by Senator Amy Klobuchar, a Democrat from Minnesota and the new chair of the Senate Judiciary Committee's antitrust panel, and by Senator Chuck Grassley, a Republican from Iowa.

"I have long supported efforts to crack down on this behavior and the recent rise in pay-for-delay agreements underscores the need for legislation to help make sure people have access to the drugs they need at a price they can afford," Klobuchar said in a statement.

Similar bills, including one in 2010, have failed in part because of opposition from the drug industry, both branded and generic. It was not immediately known if a companion bill would be introduced in the U.S. House of Representatives.

Opponents of the measure are already pressing for meetings with the two lawmakers and are confident that it will go nowhere, said Ralph Neas, chief executive of the Generic Pharmaceutical Association trade group.

"I do believe that a majority of Congress opposes the bill," said Neas, who said the settlements were good for consumers. "I know that (Federal Trade Commission Chairman) Jon (Leibowitz) has this catchy phrase 'pay for delay' but it's wrong. Patent settlements save."

The FTC said in January that brand name drug firms reached agreements with generic manufacturers 40 times in the latest fiscal year, delaying the arrival of cheaper drugs to pharmacists' shelves. That was up from 28 the previous year and the highest since the FTC started tracking them.

The commission has had mixed success in fighting the deals in court, but the issue could be coming to a head.

Most recently, the U.S. Supreme Court agreed to hear an appeal by the FTC, which had challenged annual payments of $31 million to $42 million by then-owner Solvay Pharmaceuticals Inc to stop generic versions of AndroGel, a treatment for the underproduction of testosterone, until 2015. AndroGel is now a product of AbbVie.

In Brussels in late January, EU antitrust regulators stepped up their fight against drug companies suspected of blocking cheap generic medicines, charging Johnson & Johnson and Novartis over the painkiller fentanyl.

The European antitrust watchdog said it believed the two had agreed on a "pay-for-delay" deal on generic versions of the drug, hurting Dutch consumers and healthcare providers.

View the original article here

U.S. Senate to mull bill banning 'pay for delay' pharmaceutical deals

WASHINGTON, Feb 5 (Reuters) - Key Democratic and Republican senators reintroduced legislation on Tuesday that would make it illegal for brand-name pharmaceutical companies to pay generic drug makers to keep their cheaper medicines off the market.

Such deals, in which brand-name drug companies resolve patent litigation with potentially infringing generic firms by reaching a settlement that delays a generic version of a drug in exchange for a payment, have angered U.S. and European antitrust enforcers for years.

The bill is sponsored by Senator Amy Klobuchar, a Democrat from Minnesota and the new chair of the Senate Judiciary Committee's antitrust panel, and by Senator Chuck Grassley, a Republican from Iowa.

"I have long supported efforts to crack down on this behavior and the recent rise in pay-for-delay agreements underscores the need for legislation to help make sure people have access to the drugs they need at a price they can afford," Klobuchar said in a statement.

Similar bills, including one in 2010, have failed in part because of opposition from the drug industry, both branded and generic. It was not immediately known if a companion bill would be introduced in the U.S. House of Representatives.

The Federal Trade Commission said in January that brand name drug firms reached agreements with generic manufacturers 40 times in the latest fiscal year, delaying the arrival of cheaper drugs to pharmacists' shelves. That was up from 28 the previous year and the highest since the FTC started tracking them.

The FTC has thus far had mixed success in fighting the pay-for-delay deals in court, but the issue could be coming to a head.

Most recently, the U.S. Supreme Court agreed to hear an appeal by the FTC, which had challenged annual payments of $31 million to $42 million by then-owner Solvay Pharmaceuticals Inc to stop generic versions of AndroGel, a treatment for the underproduction of testosterone, until 2015. AndroGel is now a product of AbbVie.

In Brussels in late January, EU antitrust regulators stepped up their fight against drug companies suspected of blocking cheap generic medicines, charging Johnson & Johnson and Novartis over the painkiller fentanyl.

The European antitrust watchdog said it believed the two had agreed on a "pay-for-delay" deal on generic versions of the drug, hurting Dutch consumers and healthcare providers.

View the original article here