Jon Leibowitz, a fierce opponent of reverse settlements between brand name and generic companies, is set to head the Federal Trade Commission.

President Obama announced on Feb. 27 that he intends to nominate Leibowitz as chairman. Leibowitz, who was appointed to the commission in 2004 by President George W. Bush, is currently the only Democratic member.

For the pharmaceutical industry, Leibowitz is perhaps best known for his opposition to so-called reverse settlements of patent infringement disputes in which brand name drug companies compensate generic drug companies to delay the entry of a generic drug. The FTC has filed numerous suits against companies over brand-generic deals.

Most recently, the commission sued Solvay and three generic manufacturers alleging Solvay paid its would-be competitors to postpone launching generic versions of Solvay's testosterone-replacement drug AndroGel (¹ Also see "FTC Sues Solvay, Watson, Parr, Paddock for Settlements to Delay Generic AndroGel" - Pink Sheet, 2 February, 2009.). In a concurring statement on that complaint, Leibowitz reiterated his opposition to these arrangements.

"Eliminating these pay-for-delay settlements is one of the most important objectives for antitrust enforcement in America today," he said. "Generic entry prior to patent expiration, which had been a common occurrence until the past few years, is at risk of becoming a rare exception."

Last year, the FTC sued Cephalon for side deals it reached with four generic manufacturers to keep their generic versions of Provigil (modafinil) off the market (² Also see "FTC Sues Cephalon For Anticompetitive Side Deals In Reverse Settlements" - Pink Sheet, 18 February, 2008., p. 3). Leibowitz said the commission did not go far enough and that it also should have named as a defendant any generic company that took the pay-offs and would not relinquish its 180-day marketing exclusivity.

Legislation to ban reverse settlements was introduced in the House in 2007. The bill included a provision that would have allowed FTC to make exceptions to the prohibition if the commission found an agreement furthered market competition or benefited consumers. Leibowitz testified before the House Energy and Commerce Committee that this was "a fundamentally sound approach."

Leibowitz also has played a role in the ongoing debate over follow-on biologics legislation and authorized generics.

The FTC is conducting a study of the potential market impact of follow-on biologics. The commission held a workshop on the topic in November, and is completing a similar study of the competitive impact of authorized generics (³ Also see "Biosimilar Competition Debate: Must Products Be Interchangable To Generate Savings?" - Pink Sheet, 25 November, 2008.).

Industry Reacts To Obama's Pick

Leibowitz will succeed William Kovacic, who was Bush's appointee, as chairman. The drug industry expressed support for Leibowitz taking the helm.

"We have a lot of respect for Jon Leibowitz and his long experience working on these issues," said Debra Barrett, Teva's senior vice president of governmental affairs.

As for reverse settlements, she said the generic industry believes there should be a more nuanced approach than taking away the option to settle. "We'll continue to talk to him about the issue and hope we can find a meeting of the minds," she said.

Leibowitz is also highly respected by the antitrust bar. "Jon is very bright and very energetic," said A. Douglas Melamed, a partner at Wilmer Hale. "I think he'll be a very effective chairman."

Obama says he wants to strengthen antitrust enforcement, and has criticized the Bush administration for being too lax in challenging mergers. It remains to be seen if the commission will change its approach to merger oversight. One FTC official has said not to expect much of a shift (⁴ Also see "Antitrust Enforcement Under Obama: Pfizer-Wyeth Offers An Early Test" - Pink Sheet, 2 February, 2009., p. 15).

Leibowitz served as vice president for congressional affairs for the Motion Picture Association for America for four years before joining FCT.

Prior to that, he spent more than a decade as a congressional staffer. From 1997 to 2000 he was the Democratic chief counsel and staff director for the U.S. Senate Antitrust Subcommittee. Before that he served as chief counsel and staff director for the Senate Subcommittee on Juvenile Justice and the Senate Subcommittee on Terrorism and Technology. He also served as chief counsel to Sen. Herb Kohl, D-Wis., from 1989 to 2000 and worked for Sen. Paul Simon, D-Ill., from 1986 to 1987.

- Brenda Sandburg (b.sandburg@elsevier.com)

FTC Chairman To Be Jon Leibowitz: Will Reverse Payments Get More Scrutiny?

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