In a follow-up to an earlier discussion about the shift in position by the DOJ’s Antitrust Division, which has withdrawn a September report that “raised too many hurdles to government antitrust enforcement and favored extreme caution” toward antitrust enforcement action, Hal Walker of Foley & Lardner has sent details on the confirmation hearing questions of Christine Varney, Assistant Attorney General of the Antitrust Division.

Earlier, Sen. Arlen Specter (R-Pa.), criticized Varney for what he called “incomplete answers” to his written questions; in many of her answers, she declined to give specifics and instead promised to work with other administration officials, learn more about an issue, or “vigorously enforce” the antitrust laws.

Answers to Questions for the Record Confirmation Hearing of Christine A. Varney Before the Senate Judiciary Committee.
March 10, 2009
Questions from Senator Specter

11. Despite numerous decisions to the contrary in the courts, the FTC continues to vigorously prosecute generic and brand drug makers for entering into agreements settling patent infringement litigation in which the generic firm agrees to delay entry. During your testimony before the Committee, you suggested that you might be opposed to any drug patent settlement that included a so-called reverse payment.  To clarify, does that mean that you believe any settlement in which a generic firm receives something of value, or receives a reverse payment—no matter the amount— violates the antitrust laws?

Answer: Every case must be examined on its own merits, and certainly there are some disputes where settlements can be procompetitive.

a. If a patent is valid and applicable, then a settlement allowing a generic to enter the market before the expiration of the patent-no matter what the generic manufacturer receives¬would actually increase competition. Why should such settlements be unlawful? Why should patent holders not enjoy the presumption that their patent is valid until there is some evidence that it is not?

Answer: Lawful patents should be enforced and upheld until their expiration. A patent holder who enters into a commercial arrangement to allow a competitor to enter the market prior to the patent’s expiration would most likely be procompetitive.

b. If not all settlements in which a generic firm receives something of value violate the antitrust laws, might the court in the underlying infringement case be in the best position to assess the potential anticompetitive affect of a settlement?

Answer: The merits of any infringement claim can be difficult to determine. I believe available evidence must be reviewed by a court to assess the merits of the infringement claim. In cases where a court finds no infringement, there is unlikely to be an anticompetitive effect in determining a patent holder’s rights. However, antitrust authorities may have an interest in participating in instances where there is a settlement in cases when the underlying infringement claim is not resolved through a full adjudication.

c. Do you believe it is appropriate for a government agency to continue litigating an issue
when every circuit court to address the issue has rejected the agency’s argument?

Answer: While the Federal Trade Commission has primary jurisdiction over the pharmaceutical industry, I continued to be concerned that certain reverse payment settlements, which slow the entry of generics drugs into the market, can negatively impact consumer choices and costs. Regardless of the position taken on these particular patent settlement cases, I think it is important for the antitrust agencies views are aligned on these issues, if possible. To that end, if confirmed, I pledge to work with the FTC to align the agencies’ views on this matter and develop a unified approach to dealing with reverse payment settlements. I believe that consumers are benefited by generic entry — the result is typically more choices and lower prices. If confirmed as Assistant Attorney General for Antitrust, I will work to ensure consumers’ choices are maintained. I hope these additions will further clarify my views.

Original answer to entire question 11:

Answer: While the Federal Trade Commission has primary jurisdiction over the pharmaceutical industry, I am very concerned that certain reverse payment settlements, which slow the entry of generics drugs into the market, can negatively impact consumer choices and costs. Regardless of which position you take on these particular patent settlement cases, I think it is important for the antitrust agencies to speak with one voice on this issue. To that end, if confirmed, I pledge to work with the FTC to more closely align the agencies on this matter and develop a unified approach to dealing with reverse payment settlements.

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