Court of Appeals Overturns $448 Million Disgorgement Against AbbVie, Revives FTC Reverse Payment Claim

On September 30, 2020, the United States Court of Appeals for the Third Circuit voided a $448 million award by the United States Federal Trade Commission (FTC) against AbbVie and Besins Healthcare Inc. for trying to keep generic versions of AndroGel, a testosterone replacement drug, off the market. The Court found that the lower court judge who ordered the award lacked authority under federal law.

However, Judge Thomas Hardiman, writing for the court, also found that the lower court correctly ruled that AbbVie and Besins should be held liable for monopolization for filing a sham and “objectively baseless” patent infringement lawsuit in 2011 against Perrigo Co., in an attempt to delay a generic AndroGel competitor.

Judge Hardiman also reinstated a FTC claim that challenged AbbVie’s agreement to drop a similar lawsuit against Teva Pharmaceutical Industries, Ltd., while allowing Teva to sell a generic version of its TriCor cholesterol medication. The FTC previously called that agreement an illegal “reverse payment” – the billions of AndroGel revenue that AbbVie wanted to protect vastly outweighed the $100 million in TriCor sales that may be sacrificed.

As would be expected, the FTC is pleased with the reinstatement of the reverse payment claim, but disappointed with other parts of the decision.

The unanimous Court of Appeals decision will put the case once again in the hands of United States District Judge Harvey Bartle in Philadelphia, Pennsylvania.

AbbVie Case Background

This case goes back to 2014, when the FTC filed suit against AbbVie and Besins, alleging that they filed sham infringement suits to prevent generic competition to AndroGel. The United States District Court for the Eastern District of Pennsylvania ruled that both companies, which shared a patent for AndroGel, pursued frivolous lawsuits with no reason other than to block competition.

AbbVie and Besins filed an appeal, asking the Court of Appeals to reverse the judgments, take away the FTC’s disgorgement authority, and reverse the District Court’s finding that the companies used sham litigation to stymie competition and extend their monopoly.

Supreme Court Implications

This case is also the third recent circuit court decision to opine on whether the FTC can pursue disgorgement through the United States court system. The Supreme Court will consider this issue this upcoming term.

In AMG Capital Management, LLC v. FTC, the Court of Appeals for the Ninth Circuit unanimously (3-0) ruled in favor of the FTC in a case over allegedly deceptive lending practices.

In FTC v. Credit Bureau Center, LLC, the Court of Appeals for the Seventh Circuit found that Section 13(b) did not allow for disgorgement.

Both of those cases have been consolidated and will likely be before the Supreme Court early next year.