In January, oral arguments in the 3rd Circuit Court of Appeals case between the Federal Trade Commission (FTC) and AbbVie delved into what constitutes a pay-for-delay agreement.
In the litigation, the FTC is arguing that AbbVie filed a frivolous lawsuit (sham litigation) against Teva to delay a generic version of AndroGel, AbbVie’s testosterone replacement gel. In the course of settling that litigation, the drug makers agreed on another deal – a $175 million licensing agreement for Teva to make Tricor, a cholesterol medication, a deal that the FTC argues is anticompetitive.
AbbVie is seeking the overturning of an earlier ruling on the first allegation, which could cost the company $448 million. The FTC, on the other hand, wants the AndroGel and Tricor moves to be considered together as pay-for-delay. According to Matthew Hoffman, lawyer for the FTC, the Tricor agreement “made no independent business sense for AbbVie, but it made perfect sense as an inducement for Teva” to hold off on its AndroGel rival. According to Hoffman, AbbVie “gave up” $100 million in Tricor revenue, but in so doing, protected over $1 billion in AndroGel revenue through the deal.
As noted above, AbbVie is eager to get out of paying $448 million on the sham litigation charge. The lower court already decided that Teva would not have brought its AndroGel generic to market before it actually did in 2019 because of manufacturing timelines and other unrelated reasons. This argument, put forth by AbbVie lawyer Seth Waxman, means that Teva likely wouldn’t have been able to offer a generic (whether AbbVie sued or not) and consumers were not harmed by the actions. Teva and the FTC settled last year in an agreement that prevents the company from future pay-for-delay arrangements.
The lower court, the United States District Court for the Eastern District of Pennsylvania did not roll the actions into one scheme and it is unclear whether the three-judge panel at the court of appeals will.
The judges have asked AbbVie and the FTC to file briefs on whether the appeal related to sham litigation should instead be heard by the U.S. Court of Appeals for the Federal Circuit, the nation’s top patent appeals court. Also discussed at the hearing was whether the court should delay its decision because of an unrelated case currently pending before the Supreme Court of the United States, Liu v. SEC, that covers similar questions of agencies’ authority.