FTC Backs PTO’s New Patent Settlement Rules for Enhanced Antitrust Oversight

This week, the Federal Trade Commission (FTC) announced its endorsement of the U.S. Patent and Trademark Office’s (PTO) newly proposed regulations aimed at increasing transparency and antitrust oversight in patent dispute settlements, particularly within the pharmaceutical industry.

In April 2024, the PTO proposed changes that would mandate the disclosure of all pre-institution agreements made between companies before the Patent Trial and Appeal Board (PTAB) decides whether to initiate a trial. This proposal also requires the disclosure of any collateral deals struck by the disputing parties before bringing their case to the PTAB.

Currently, under PTO rules, parties are only obligated to reveal details of a settlement if it is reached after the PTAB has commenced its proceedings. The proposed amendments aim to fill this gap by requiring more comprehensive disclosure of agreements made at earlier stages.

According to the FTC, these changes will “enhance both the FTC and the Department of Justice’s ability to monitor and curb potentially anticompetitive settlement agreements.” By instituting these rules, the FTC hopes to “identify and investigate potentially unlawful settlements in the pharmaceutical sector and across other industries.”

The broader disclosure requirements are particularly significant in helping the FTC detect “reverse payment settlements.” These occur when a patent holder compensates an alleged infringer to withdraw their patent challenge and delay entering the market. Such settlements, especially in the pharmaceutical industry, pose antitrust concerns as they suppress competition and maintain high drug prices.

The FTC’s backing underscores the importance of these regulatory changes in fostering a competitive market environment, ensuring fair practices, and protecting consumers from artificially inflated drug prices. The enhanced oversight is expected to play a crucial role in preventing anticompetitive behavior that undermines market integrity and consumer welfare.

The FTC commissioners unanimously voted 5-0 in favor of supporting the PTO’s proposed rules.

Since last year, the FTC has intensified its scrutiny of pharmaceutical patents. In November 2023, the antitrust watchdog challenged over 100 listings in the FDA’s Orange Book, asserting that they were “improperly or inaccurately listed.” This campaign targeted several companies, including GSK, AstraZeneca, and AbbVie, focusing on products like asthma inhalers and autoinjectors.

Source: Bio Space