Chapter 10: Conclusion
10.2 Future Prospect and Conclusion
As of writing of this paper, the struggle between brand name and generic manufacturers remain unabated and will likely to be for the coming years.
Several issues raised in this paper remain contested. They are:
1) Legality of reverse payment.
2) Legality of Brand name manufacturer voluntarily delisting its registration from Orange Book.
3) Use of authorized generic.
4) Will a final court decision and declaratory judgment necessary?
Legality of Reverse Payment
In a recent Supreme Court ruling in FTC v. Actavis,147
the Court put forth there are
several factors to consider when determining whether reverse payment violates antitrust rule or not. These factors includes: 1) size of patent holder’s payment 2) its scale in relation to payor anticipated future litigation costs 3) its independence from other services for which it represents payment and 4) the lack of any other convincing justification. As mentioned in previous chapters, before this judgment in governing authority in the pay-for-delay or reverse payment is the case of In re Cardizem CD148, which holds any type of reverse payment, is per se illegal. This issue is followed by147 FTC v. ACTAVIS, INC. ( ) 677 F. 3d 1298, reversed and remanded.
148 In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003).
151
another case, In re K-Dur149
, Federal Court proposes a rule of reason balancing test.
Any resettlement involving brand company paying generic manufacturer not to market its drug for a period of time will be considered as have violated antitrust regulation unless brand name company can prove there is a genuine pro-competitive benefits resulted from such payment.
In Supreme Court’s holding of FTC v. Actavis, the Court reject all the aforementioned tests put forth in other Courts. Supreme Court found these tests too are either too simple or still insufficient to justified immunity from antitrust law. More specifically, lower Courts’ scope of patent is not sufficient to fully grasp the anti-competitive effect resulted from these complex settlement; while, rule of reason balancing test is too broad to be employed consistently. The majority (5 votes for FTC and 3 against) in Supreme Court holds: “that reverse payment settlements are not presumptively unlawful and although patent-based settlement agreements can sometimes violate anti-trust laws, the Court declined to apply an all-or-nothing rule regarding these agreements. Instead, the Court stated that there are five considerations that should have allowed the consideration of FTC’s case. These considerations are: 1) that specific restraints in the settlement agreement had the potential to adversely affect competition; 2) that certain anti-trust consequences will sometimes prove unjustified; 3) that if a reverse payment settlement can cause anticompetitive harm, the patent-holder likely has the power to bring about that harm as well; 4) an anti-trust claim may be more administratively feasible than the lower court believed; and 5) the fact that a large, unjustified reverse payment settlement risks anti-trust liability does not prevent litigating parties from settling their lawsuits. The Court held that these considerations outweighed
149 In re K-Dur Antitrust Litigation, 689 F.3d 197 (3rd Cir. 2012).
152
the lower court’s decision to provide anti-trust immunity to reverse payment settlements.
150
Use of Authorized Genetic
As writing of this thesis, this issue remains undecided. Between year of 2004 ~ 2008, there are total of 38 settlement involving Authorized Generics. In 20 cases, Brand manufacturers decide not to compete with generic manufacturer via authorized generic drugs. Instead, brand name grant exclusive license to generic manufacturer. Generic companies in return agree not to make their own drugs but are supplied exclusively by brand manufacturers.
This is actually a win-win situation for both companies. Business-wise brand manufacturer uses a very different business mode as compare with its generic competitors. As a manufacturer of innovator drugs, brand manufacturer is adopt at research and development; while, generic manufacturer are more trend toward channel marketing and pricing strategy. Therefore, brand manufacturer is less familiar with the business environment of selling generic drugs and its margin may even be too low for brand name company to be justified for such venture economically. Therefore, leaving the act selling of generic drug to generic manufacturer while brand manufacturer still ripe the benefits of being an exclusive supplier is a more economically favorable choice for both companies.
In conclusion, in the coming years, the battle between generic and brand name companies will only get more intense as many prominent innovator drug became
150 FTC v. Actavis Inc., available at http://www.oyez.org/cases/2010-2019/2012/2012_12_416.
153
available for grab. The abovementioned issues will undoubtedly become some of the most contested grounds in this war. From Taiwan’s perspective, even though patent linkage system is still in its infancy. If signing an FTA with the States is an inevitable step then whatever litigation battles and arguments take place in the States, will one day make their appearance on Taiwan’s legal scene151 as well. The author believes it will serve Taiwan’s Court well by observing how these arguments unfold in the States and make the judgments in accordance with unique local elements in order to maximize public good. The essential nature between brand name and generic drug company is, after all, a tug-of –war between two spectrums of public goods: the needs for innovation in medicine and timely access of effective medicine for the public.
151 陳逸南，「專利濫用與學名藥發展」，藥技通訊，第 120 期，頁 25（2008）。
154
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