Tuesday, July 13, 2010

It's So Unusual: A Case to Watch

En banc review "is not favored," under FRAP 35(a), so why did the Second Circuit recently invite the losing side in a case to seek just that?  This unusual step, and the unusual significance of the case, make it one to watch.

Whether so-called "pay-to-delay" deals between drug makers and generic manufacturers pass antitrust muster is a live question.  According to the FTC, such deals, which keep generics off the market in exchange for payment or other value, "cost American consumers $3.5 billion a year in higher prescription drug prices."  To drug companies though, they "are a useful way to resolve costly litigation which would otherwise delay drug launches even longer."

In April, the Second Circuit addressed this important question—with even higher stakes than usual since the drug at issue was Cipro, "the most prescribed antibiotic in the world" (see link at 3).  The panel in that case upheld a "pay-to-delay" deal, citing circuit precedent, and then took the additional step of encouraging the losing side to request en banc rehearing, normally a burden courts are only too happy to avoid.  The court gave various reasons for its surprising suggestion, including the United States' and its own criticism of the prior precedent.

An en banc petition has been filed, as have various amicus briefs in support, including by the Department of Justice and thirty-four state attorneys general.  The other side has not responded yet.  Under FRAP 35(e), the court must invite a response and has not done so to date.

Along with a possible court invitation, and further filings, also to watch: The House recently passed legislation making "pay-to-delay" deals presumptively anticompetitive, which the Senate must now approve.