[Ip-health] FTC: Pay-for-deal deals that block generic entry up 60% in FY 2010

Michael Palmedo mpalmedo at wcl.american.edu
Thu May 5 13:25:25 PDT 2011


FTC Staff Report Finds 60 Percent Increase in Pharmaceutical Industry
Deals That Delay Consumers' Access to Lower-Cost Generic Drugs

Deals Are Costing Taxpayers, Consumers Billions of Dollars

For Release: 05/03/2011

Pharmaceutical companies struck an unprecedented number of deals in
Fiscal Year (FY) 2010 in which the manufacturers of branded products
paid potential generic rivals and generic companies agreed to defer the
introduction of lower-cost medicines for American consumers, according
to an overview of industry data released by the staff of the Federal
Trade Commission <http://www.ftc.gov/> .

The FTC staff report <http://ftc.gov/os/2011/05/2010mmastaffreport.pdf>
found that the number of these deals skyrocketed more than 60 percent,
from 19 in FY 2009 <http://www.ftc.gov/reports/mmact/MMAreport2009.pdf>
to 31 in FY 2010. Overall, the agreements reached in the latest fiscal
year involved 22 different brand-name pharmaceutical products with
combined annual U.S. sales of about $9.3 billion.

"Collusive deals to keep generics off the market are already costing
consumers and taxpayers $3.5 billion a year in higher drug prices," said
FTC Chairman Jon Leibowitz. "The increasing number of these deals is a
win-win proposition for the pharmaceutical industry, but a lose-lose for
everyone else."

Millions of Americans rely on generic drugs to make medicine affordable,
and generics also help hold down costs for taxpayer-funded health
programs such as Medicare and Medicaid. Generic prices are typically at
least 20 to 30 percent less than the name-brand drugs, and in some cases
are up to 90 percent cheaper.

In recent years, certain brand-name companies have paid generic
challengers to settle their patent challenges and delay the introduction
of lower-cost medicines. An FTC staff study
<http://ftc.gov/os/2010/01/100112payfordelayrpt.pdf>  has found that
such settlements that include a payment delay generic entry by 17 months
longer on average than those that do not include a payment.

The FTC has challenged a number of these patent settlement agreements in
court, contending that they are anticompetitive and violate U.S.
antitrust laws. The agency also has supported legislation in Congress
that would prohibit settlements that increase the cost of prescription

The staff report summarizes data on patent settlements filed with the
FTC and the Department of Justice during FY 2010. There were a total of
113 final patent settlements. Of those, 31 settlements contained a
payment to a generic manufacturer and also restricted the generic's
ability to market its product. Of those 31 settlements, 26 involved
generics that were so-called "first filers," meaning that they were the
first to seek FDA approval to market a generic version of the branded
drug. Because of the regulatory framework, when first filers delay
entering the market, other generic manufacturers can also be blocked
from entering the market, which makes such patent settlement deals
particularly harmful to consumers.

The staff report issued today also cited three other settlements in FY
2010 that did not record any explicit compensation for the generic, but
provided other assurances that may have had the effect of compensating
the generic for delaying entry.

The FTC's Bureau of Competition works with the Bureau of Economics to
investigate alleged anticompetitive business practices and, when
appropriate, recommends that the Commission take law enforcement action.
To inform the Bureau about particular business practices, call
202-326-3300, send an e-mail to antitrust at ftc.gov or write to the Office
of Policy and Coordination, Room 394, Bureau of Competition, Federal
Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To
learn more about the Bureau of Competition, read "Competition Counts" at
http://www.ftc.gov/competitioncounts <http://ftc.gov/competitioncounts>


Mitchell J. Katz
Office of Public Affairs


Bradley S. Albert
Bureau of Competition


More information about the Ip-health mailing list