11.14.2011 0

No more time for Leibowitz at FTC

By Rick Manning — Settlement agreements between branded and generic drug makers have brought generic versions of some of the biggest blockbuster drugs in history, like Lipitor and Plavix into the market early saving consumers millions of dollars.  In fact, one such settlement is bringing a generic form of Lipitor to market as early as November 30th of this year.

This consumer cost saving legal settlement was agreed to by both companies without coercion from the government.  Yet this is exactly the kind of legal agreement that the current U.S. Federal Trade Commission (FTC) Chairman Jon Leibowitz would prohibit if he convinces Congress to change the law.

Leibowitz  believes that allowing companies who are in legal disputes over pharmaceutical patents to settle these cases out of court hurts the U.S. consumer, and has sought to use his power as the FTC Chairman to stop these settlements.

Time and again, the U.S. courts have held that Leibowitz’ FTC does not have the power to stop these settlements.  In the face of these legal failures, Leibowitz is asking the Congressional SuperCommittee to jump into the fray and give him the power he craves.

While pharmaceutical patent law is dense enough to make one’s eyes bleed, the Leibowitz position is easy to define.  He doesn’t like that individual companies are allowed under the law to jointly determine that settling a case rather than spending millions of dollars to either prosecute or defend it is in their interests.

Leibowitz instead would like to create legal death matches where if a company files a case, or has the misfortune to have one filed against it, that company will be forced to pay lawyers for years and years on a case which may or may not be going their way.  A great deal for the thousand dollar an hour attorneys, but a crummy one for the consumer.

Settling legal disputes out of court is a time honored way for individual companies to bring cases to conclusion and create win/win situations.

Ironically, Leibowitz’ efforts to deny competing pharmaceutical companies the right to engage in this normal legal give and take will have the perverse impact of lessening the incentive for generic drug manufacturers to be the first movers in a legal case, as they will incur all the legal costs and risks with little competitive advantage over other generic drug manufacturers should they win.

The settlement process allows many medicines to come to market earlier, while protecting the patent rights of the drug manufacturer.   And in some notable cases, like Lipitor, is helping to bring a product into the generic marketplace more rapidly than it would have without the settlement.

The FTC is supposed to protect consumers, but in Chairman Leibowitz’ one-sized, fits all solution to problems he sees in the settlement process, he is effectively attempting to create a one sized fits none solution.

In fact, Leibowitz has effectively created a government solution in search of a problem with the ultimate goal to take what little remaining autonomy our nation’s drug manufacturers have from government control away.

The FTC Chairman finds himself in the unique position of having his re-nomination for a second seven year term under consideration by the Senate, and reportedly is using this face time with Senators as a means to lobby for the power grab.

Given his apparent unhappiness with the laws that he has been entrusted to enforce, coupled with  his single-minded obsession on expanding the power of the FTC, the Senate should take this opportunity to deny Mr. Leibowitz a second term.

After all, he has already served for eight years (the same length of time as a two-term President of the United States,) and it doesn’t serve the consumers interest to give one man fifteen years as a decision maker on an important regulatory body like the FTC.

The Senate Commerce, Science and Transportation Committee is conducting a hearing on Leibowitz’ confirmation on November 15.   It is time for new blood on the FTC, and hopefully, Leibowitz’ re-nomination will be rejected in favor of someone who is more interested in the actual duties of the FTC and less interested in blatantly expanding its power.

Rick Manning is the Director of Communications for Americans for Limited Government. You can follow Rich on Twitter at @RManning957.

Click here to see ALG’s Letter to FTC Inspector General requesting investigation of Leibowitz’ taxpayer paid lobbying activity.

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