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FTC Testifies Before Senate Armed With New Pharmaceutical Patent Report: Paying Off Generics To Prevent Competition With Brand Name Drugs Should Be Prohibited

Client Alert | 1 min read | 01.17.07

Continuing with its efforts to prevent “exclusive payment settlements” (aka “reverse payments”) by name brand drug manufacturers to keep generic competitors from entering the market, the Federal Trade Commission (FTC) brought its case to the Senate Committee on the Judiciary today. Exclusive payment settlements occur where a brand name manufacturer settles a patent dispute with a generic manufacturer by paying a specified amount in exchange for an agreement that the generic manufacturer will not enter the market for a period of time. According to 2005 court decisions, these settlements are perfectly legal as a valid exercise of patent power. Jon Leibowitz, Commissioner of the FTC, testified that the court decisions protect patent rights at the expense of consumers, because they provide a roadmap for pharmaceutical companies to share monopoly profits instead of competing.

An FTC study also issued today reveals that in recent years, the number of exclusive payment settlements is on the rise. Specifically, the FTC’s FY 2006 report on pharmaceutical patents, found that in 14 of 28 final settlements, generic manufacturers received compensation from brand name manufacturers and agreed to stay out of the market for a period of time. In prior years, the numbers were significantly lower: 3 of 11 in FY 2005 and 0 of 14 in FY 2004.

Mr. Leibowitz testified that “[t]he increased costs resulting from anticompetitive agreements that delay generic competition harm all those who pay for prescription drugs: individual consumers; the federal government, which spends substantial sums under the new Medicare Part D program; state governments trying to provide access to health care with limited public funds; and American businesses striving to compete in a global economy.”

The Senate Committee on the Judiciary also heard from those on the other side of the debate, including the CEO of PhRMA, Bill Tauzin. The text of his statement is not yet available.

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Client Alert | 5 min read | 12.12.25

Eleventh Circuit Hears Argument on False Claims Act Qui Tam Constitutionality

On the morning of December 12, 2025, the Eleventh Circuit heard argument in United States ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 24-13581 (11th Cir. 2025). This case concerns the constitutionality of the False Claims Act (FCA) qui tam provisions and a groundbreaking September 2024 opinion in which the United States District Court for the Middle District of Florida held that the FCA’s qui tam provisions were unconstitutional under Article II. See United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). That decision, penned by District Judge Kathryn Kimball Mizelle, was the first success story for a legal theory that has been gaining steam ever since Justices Thomas, Barrett, and Kavanaugh indicated they would be willing to consider arguments about the constitutionality of the qui tam provisions in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). In her opinion, Judge Mizelle held (1) qui tam relators are officers of the U.S. who must be appointed under the Appointments Clause; and (2) historical practice treating qui tam and similar relators as less than “officers” for constitutional purposes was not enough to save the qui tam provisions from the fundamental Article II infirmity the court identified. That ruling was appealed and, after full briefing, including by the government and a bevy of amici, the litigants stepped up to the plate this morning for oral argument....

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