In a March 8 opinion, a three-judge panel of the U.S. Court of Appeals for the 11th Circuit in Atlanta rejected a 2003 Federal Trade Commission (FTC) ruling that Schering-Plough Corporation’s patent settlements with two other companies amounted to pay-offs not to compete. The FTC claimed that the company illegally kept cheaper versions of blood pressure drug, a controlled-release potassium chloride supplement K-DUR(R) 20 (potassium chloride), USP off the market.

The judges noted that: “Simply because a brand-name pharmaceutical company holding a patent paid its generic competitor money cannot be the sole basis for a violation of antitrust law.”

The company has consistently maintained that the patent litigation settlements complied with the law and benefited consumers by allowing generic product to enter the market two to five years before the expiration of the relevant patent.

Schering-Plough holds a formulation patent for K-DUR, which gives the company the right to exclude infringing products into 2006. In 1995, Upsher- Smith and ESI Lederle filed separate Abbreviated New Drug Applications (ANDA) with the U.S. Food and Drug Administration (FDA) seeking to market generic versions of K-DUR. Schering-Plough brought separate actions against both companies alleging that their products infringed Schering-Plough’s patent. In each case, Schering-Plough and the parties settled before trial. Under the settlements, licenses were agreed to allowing Upsher-Smith to bring its product to market in September 2001 and ESI Lederle to bring its product to market in January 2004.

The FTC Bureau of Competition in March 2001 filed a complaint in Washington, D.C. before an FTC administrative law judge charging that the patent litigation settlements involving K-DUR were anti-competitive and violated the Federal Trade Commission Act.

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