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U.S. Sues Two Drug Firms for Delaying Generic Birth-Control Pill

The Federal Trade Commission has gone to court to end an agreement between drug makers Warner Chilcott and Barr Pharmaceuticals that allegedly blocked the production of a generic oral contraceptive.

The FTC alleges that Barr had planned to launch a generic version of Warner Chilcott's Ovcon oral contraceptive but Warner Chilcott paid the company $20 million to delay the product from going on the market until 2009.

"The agreement between Warner Chilcott and Barr is a naked agreement not to compete and to share the resulting profits between a branded drug seller and its only prospective generic competitor," FTC Chairman Deborah Platt Majoras said in a statement.

Warner Chilcott said in a statement that it is "disappointed" by the FTC's decision to sue the company.

According to the complaint filed in the U.S. District Court for the District of Columbia, Barr filed an application with the Food and Drug Administration in September 2001 for approval to make and sell a lower-priced generic version of Ovcon.

The company allegedly planned to price its product nearly 30 percent lower than Warner Chilcott's contraceptive and anticipated that its generic version would capture close to half the new prescriptions for Ovcon within its first year of release.

To forestall this competitive threat and protect its Ovcon sales, the FTC alleges, Warner Chilcott entered into an agreement with Barr in April 2004 preventing the company from selling the generic product in the United States for five years. In exchange for Barr's agreement to keep the product off the market, Warner Chilcott paid the company $20 million, according to the complaint.

"The effect of this anticompetitive agreement between Warner Chilcott and Barr has been to deprive purchasers of the choice of a lower-cost generic alternative to Warner Chilcott's higher-priced branded Ovcon," the complaint says.

In its statement, Warner Chilcott said the FTC examined its agreement with Barr two years ago and did not find any problem with it.

"It was not anticompetitive then and it is not anticompetitive now," the company said.

Warner Chilcott added that Ovcon has less than a 2.5 percent share of the combined hormonal-contraceptive market.

"Due to the heavy sampling of branded products in this marketplace, there has been no consumer harm resulting from our agreement with Barr," the company said in the statement.

The FTC is nonetheless looking to permanently enjoin enforcement of the agreement, claiming that the deal violates the Federal Trade Commission Act, which prohibits unfair methods of competition. The agency is also seeking unspecified civil penalties.