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AARP Seeks to Expand Competition for Prescription Drugs

AARP continues its fight to expand access to and availability of generic competition in the prescription drug marketplace.

Background

Purchasers of prescription drugs challenged an agreement between the name brand and generic manufacturers of Loestrin 24, arguing that they had entered into an agreement that kept competitors of the name brand drug off the market, in violation of antitrust laws.

Loestrin 24 is an oral contraceptive pill produced by Warner Chilcott (“Warner”). In 2006, Watson Pharmaceuticals (“Watson”) filed an application to produce a generic version of Loestrin 24. Litigation between Warner and Watson ensued, and as part of the settlement of the patent litigation, the two entered into an agreement wherein Watson agreed to delay entering the market until January 2014.  No cash was exchanged, but the agreement included a number of clauses valuable to each party. In October 2010, another generic competitor – Lupin – entered the fray and again Warner entered into an agreement with non-cash consideration.

Without the two agreements, a generic competitor to Loestrin 24 would have entered the market as early as September 2009, when Watson received its initial approval from the federal Food and Drug Administration. Loestrin 24 has been an extremely valuable asset to Warner, accounting for approximately $1.75 billion in total sales between 2006 and 2012.

In 2013, the U.S. Supreme Court’s decision FTC v. Actavis (a case in which AARP Foundation Litigation attorneys filed AARP’s friend-of-the-court brief) held that “pay for delay” agreements may violate federal antitrust laws. The key factual difference between Actavis and the Loestrin litigation is that no cash was actually exchanged between the parties in the latter case.

AARP filed a friend-of-the-court brief in the Loestrin litigation, emphasizing that regardless of the form of compensation, pay-for-delay agreements impose significant harm to consumers through heightened costs and reduced access to medications. The brief also explains how the various forms of “payment” in the agreement were of value to the parties, and therefore qualified as an inducement to engage in anticompetitive conduct.

What’s at Stake

Agreements that keep competitors off the market are lucrative for brand name manufacturers, and devastating for consumers. By restricting competition, these agreements limit choices consumers have, and artificially inflate prices paid by individuals, insurance providers, and government health programs. Forcing people to choose among high-priced medications and other necessities of life endangers life and health; artificially inflating prices paid by wholesale purchasers contributes to the spiraling cost of federal and state health programs, as well as the costs to purchase private insurance.

Case Status

In re. Loestrin 24 Fe Antitrust Litigation is before the U.S. Court of Appeals for the First Circuit.