Pay-for-Delay Drug Settlements Draw Fire

September 2nd, 2010 | Sources: BurrillReport

So-called pay-for-delay settlements involving generic and branded drug makers are becoming more common and costing consumers $3.5 billion each year, according to FTC Chairman John Liebowitz, who testified before Congress that he wanted to eliminate such agreements altogether.

These deals allow branded drug makers to sell their expensive products without generic competition for a period longer than the duration of the patents they hold on their drugs.

In the first 9 months of fiscal 2010, drug makers entered into 21 patent litigation settlements.  That’s more than the entire previous year.

“That’s almost an epidemic,” Leibowitz told BurrillReport. “Every single FTC Commissioner, going back through the Bush and Clinton administrations, has supported stopping these unconscionable agreements.”

The FTC supports legislation designed to halt pay-for-delay settlements. At the moment, this legislation is tucked into a Senate spending bill.

Both branded and generic drug companies would prefer to leave things just as they are. “The FTC’s testimony fails to present the whole story regarding patent settlements,” according to a statement released by the Generic Pharmaceutical Association. “Over the past 10 years, patent settlements have enabled dozens of first-time generics to come to market many months before patents on the counterpart brand drugs expired.”

The Pharmaceutical Research and Manufacturers of America, which represents branded drug makers, agreed. “A blanket ban could decrease the value of patents, remove an important option for a patent-holder’s defense of intellectual property, and reduce the incentives for future innovation of new medicines,” it said.

A Senate panel has already recommended banning pay-for-delay deals, but narrowly. Pennsylvania Democrat Arlen Specter introduced an amendment to remove the ban from the spending bill, but that amendment did not pass. The ban must pass the full Senate and House before becoming law.


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