The chairman of the Federal Trade Commission, testifying on Capitol Hill today, came under criticism that the agency misused a subpoena amid an investigation of a "reverse payment" settlement between two drug makers. FTC Chairman Jon Leibowitz declared the FTC "plays by the rules."
Earlier this month, a federal magistrate judge in Washington had granted a request from a drug maker’s CEO to allow limited discovery of the FTC in the subpoena dispute. The agency is trying to enforce a subpoena issued last year against Paul Bisaro, chief executive of Watson Pharmaceuticals. Bisaro wanted the subpoena quashed—or at least a chance to pry open the FTC through discovery. Click here for a write-up on the dispute.
Bisaro, represented by a team from Skadden, Arps, Slate, Meagher & Flom, including partner Steven Sunshine, is arguing the FTC used the subpoena to try to pressure Watson Pharmaceuticals to enter into a business deal with another company in which Watson would relinquish “first filer” market exclusivity rights to a particular drug patent. The other company, Apotex, had several conversations with the FTC about Watson’s refusal to enter a deal, court records show. (Watson had earlier entered into an agreement with brand-name company Cephalon Inc., concerning marketing of a generic version of the drug in question.)
Magistrate Judge Alan Kay criticized the FTC in a July 13 ruling (.pdf), writing: “This Court finds that the facts before it present a strong possibility that the FTC did share confidential information with Watson’s competitor, that it did attempt to broker a deal between Apotex and Watson that would require Watson to relinquish any statutory ‘first filer’ rights it had acquired, and that it did initiate this investigation to pressure Watson to relinquish these rights and to harass it when it refused."
The FTC has made investigations of reverse-payment settlements between brand-name pharmaceutical companies and generic drug makers a top priority, Leibowitz said today, testifying before the House Judiciary Subcommittee on Courts and Competition Policy.
Rep. Howard Coble (R-N.C.) first raised the judge’s ruling in an opening statement, saying he had concern about the FTC action in the Bisaro case. “If in fact true, these allegations are serious,” Coble said.
Later, Rep. Jason Chaffetz (R-Utah) said that the judge’s ruling marks the first time in more than 30 years that a federal judge has allowed limited discovery of the FTC.
“As for the issue involving Watson and Mr. Bisaro’s deposition, let me make a couple of points. We play by the rules at the FTC,” said Leibowitz, addressing Chaffetz.
There was a unanimous commission vote, which Leibowitz called “unprecedented,” to make the agency’s interrogatories interrogatories in the Bisaro case public.
“We did that because we thought it was important to get all the facts out,” Leibowitz continued. “Again, I believe we play by the rules. I think, if the facts do come out, you will see that we didn’t do anything wrong.”
Leibowitz called Bisaro “the person who has avoided our subpoena, our deposition, for almost a year now.”
“If your committee were doing an investigation, and someone refused to come and testify, I think you’d be upset over it,” Leibowitz said. “We think Watson is slinging mud at us, and some of it will stick occasionally.”