US generic drugmakers have slammed new moves in Congress to ban pay-for-delay deals with branded drugmakers, and claims by a federal agency chief that numbers of such settlements this year so far have already beaten all previous annual totals.

Preliminary figures for the first nine months of FY 2010 show there have been 21 brand-generic settlements involving some sort of compensation, which is more than any prior full fiscal year, Jon Leibowitz, chairman of the Federal Trade Commission (FTC) told a House Judiciary Committee subcommittee hearing last week.

“These settlements protect $9 billion in prescription drug sales,” Commissioner Leibowitz told the panel. “At the same time, the settlement filings confirm that brand and generic companies can settle their disputes without brand companies paying their generic competitors not to compete. 75% of all final patent settlements – 63 – did not involve compensation from the brand company to the generic combined with a delay in generic entry,” he added.

The Commission chairman has repeatedly stressed that abolishing pay-for-delay deals (also known as “exclusion” or “reverse” payments, in which the brand-name drug firm pays its potential generic competitor to abandon a patent challenge and delay entering the market) is one of the FTC’s top priorities.

The number of such agreements is increasing, from zero in FY 2004 to 19 in FY 2009, Commissioner Leibowitz told the panel. They currently protect at least $20 billion in sales of branded drugs from generic competition and delay the availability of cheaper generics by an average of 17 months, according to recent agency research, he said, adding: “if not stopped, pay-for-delay deals will, evening using conservative assumptions, cost consumers $3.5 billon a year.”

The Generic Pharmaceutical Association (GPhA) attacked Commissioner Leibowitz’ testimony as “misguided” and said it failed to “present the whole story.”

The data which he presented to the hearing “does not override the fact that 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,” says the Association. It also quotes a report by investment bank RBC Capital Markets which suggests that, of the 37 new generic drug launches expected in 2010 and 2011, 24 will be able to launch prior to patent expiration because of settlements.

“Settlements have never resulted in delaying generic market entry past patent expiration,” the group stresses.

It also says it is “extremely disappointed” by the Senate Appropriations Committee’s decision late last week to support a ban on such deals. The Preserve Access to Affordable Generic Drugs Act (S 369), which passed on a 15-15 vote, was “slipped into” the Financial Services and General Government appropriations bill, “in the latest attempt to move forward legislation that has been unable to pass as a freestanding bill,” the group comments.

S 369, sponsored by Democrat Herb Kohl and Republican Charles Grassley, is a companion bill to HR 1706, which was recently passed by the House as part of the Supplemental Appropriations Act of 2010 (HR 4899).

Welcoming the vote, Sen Kohl said that the cost of brand-name drugs rose nearly 10% last year while the cost of generic drugs had fallen by nearly 10%. “At this time of spiraling health care costs, we cannot turn a blind eye to these anticompetitive backroom deals that deny consumers access to affordable generic drugs,” said the Senator, who chairs the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights.