The US Federal Trade Commission (FTC) has told the Joint Select Committee on Deficit Reduction that action to ban deals between branded and generic drugmakers to delay generic competition would save the government and taxpayers "billions of dollars."
The number of such potential "pay-for-delay" deals totaled 28 during fiscal 2011 (October 1, 2020-September 30, 2011), just under the previous year's total of 31, and they involve 25 different brand-name drugs with combined annual US sales of more than $9 billion, according to a new FTC report.
Pay-for-delay settlements increase prescription drug costs for consumers and the government every year, but Congress has the opportunity to fix this problem through the Joint Select Committee (the so-called "Supercommittee"), said FTC chairman Jon Leibowitz.
Patent settlements that include a payment or other compensation delay generic entry by an average of 17 months longer than those that do not include a payment, says the FTC, which points out that the Congressional Budget Office (CBO) has estimated that proposed legislation to tackle the issue would reduce the federal deficit by $2.67 billion over 10 years.
During FY 2011, drugmakers reached a total of 156 final patent settlements, 28 of which contained a payment to a generic manufacturer and also restricted the generic's ability to market its product, says the Commission's latest report. Of those 28 settlements, 18 involved "first-filer" generics, ie, those that were the first to seek Food and Drug Administration (FDA) approval to market a generic version of the branded drug and, at the time of the settlement, were eligible to exclusively market it for a period.
"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," says the FTC.
However, a generics industry group has dismissed the FTC campaign to get such settlements banned, saying it is "flawed" and "continues to miss the fundamental point."
Patent settlements are "pro-competitive" and "savings-generating," said Ralph Neas, chief executive of the Generic Pharmaceutical Association (GPhA). They “speed up the availability of less-costly generic drugs and save money for everyone,” and "have never delayed access to the generic past the patent expiration date.” Instead, they provide “the one sure way of getting the lower-cost generic to consumers and patients before the patent expires on the counterpart brand drug," he said.
Mr Neas pointed out that this year alone, 16 of the 22 first-time generics that will become available in the US are entering the market prior to patent expiry because of a settlement agreement, and they include generic versions of Pfizer's Lipitor (atorvastatin), Bristol-Myers Squibb/Sanofi's Plavix (clopidogrel bisulphate) and Pfizer's Effexor XR (venlafaxine), three of the most-prescribed drugs in America.
"If settlements were banned, as the FTC wants to do, none of these medicines would be available as generics until next year or later," said Mr Neas.