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Fifth Circuit Upholds FTC Finding: Impax Lab's Reverse Payment Scheme Was Illegal

Court agrees with FTC that the payments were "substantial and unjustified."

Citing “more than enough evidence," the U.S. Court of Appeals for the Fifth Circuit has upheld the Federal Trade Commission’s determination that Impax Laboratories, LLC engaged in an illegal pay-for-delay settlement to block consumers’ access to a lower-cost generic version of Endo Pharmaceuticals Inc.’s Opana ER, an extended-release opioid pain reliever. Entering into what is known as a “reverse payment” arrangement, Impax had agreed to accept funds from Endo to stay out of the market for two-and-a-half years. 

Judge Gregg Costa wrote in the Fifth Circuit’s opinion that the commissioners correctly found sufficient evidence of the scheme and that “a less restrictive alternative was viable.” 

A key factor considered by the court was whether the reverse payment was "substantial and unjustified." It concluded that Endo’s payment to Impax of $112 million was substantial, and that the only permissible justifications for a reverse payment are savings in litigation expenses and the fair market value of any promised services in the settlement agreement.

FTC Acting Chair Rebecca Kelly Slaughter said this marks another in a series of actions the Commission has taken to stop harmful pay-for-delay agreements. The Commission’s held that the FTC staff had proven that the agreement between Impax and Endo violated Section 5 of the Federal Trade Commission Act. The Commission reversed Chief Administrative Law Judge D. Michael Chappell’s initial decision

The final order bars Impax from entering into any type of reverse payment that defers or restricts generic entry, including no-Authorized Generic commitments, as well as certain business transactions entered with the branded pharmaceutical manufacturer within 45 days of a patent settlement. The order also bars Impax from entering any agreement with another oxymorphone ER manufacturer that prevents or restricts competition between oxymorphone ER products. 

The FTC filed another case against the companies, plus Impax’s owner, Amneal Pharmaceuticals, Inc., in U.S. District Court for the District of Columbia in January 2021, alleging similar violations of antitrust laws involving the same drug.  

Edited by Tom Hagy for MoginRubin LLP.   

© MoginRubin LLPNational Law Review, Volume XI, Number 168
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About this Author

Joy M. Sidhwa Intellectual Property Litigation Attorney Mogin Rubin Law Firm
Senior Counsel

Ms. Sidhwa concentrates on antitrust and other complex litigation for MoginRubin and leads the document discovery team. She is involved in many facets of litigation, including creative discovery strategy and expert and trial preparation. Based on her expertise and results, Ms. Sidhwa was named to the Best of the Bar by the San Diego Business Journal and received the 2018 and 2019 International Advisory Experts Award for Complex Litigation in California. She also received the Pan Asian Lawyers of San Diego’s President’s Award for Outstanding Service in 2009 and 2010 for...

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