The US Federal Trade Commission has published a report which claims that “the number of potentially anticompetitive patent dispute settlements between branded and generic drug companies increased significantly” last year compared with 2011.
The antitrust agency says that the number of deals jumped from 28 to 40 in 2012, the highest of any year since the FTC began collecting data in 2003. In nearly half (19) of these settlements, “branded firms may have used the promise that they would not develop or market an authorised generic as a payment to stall generic drug firms from marketing a competing product”.
Overall, the agreements reached in 2012 involved 31 different brand-name pharmaceuticals with combined annual US sales of more than $8.30 billion. FTC chairman Jon Leibowitz said that “sadly, this year’s report makes it clear that the problem of pay-for-delay is getting worse, not better”.
He added that “more and more brand and generic drug companies are engaging in these sweetheart deals, and consumers continue to pay the price.” Mr Leibowitz concluded by saying that “until this issue is resolved, we will all suffer the consequences of delayed generic entry – higher prices for consumers, businesses and the US taxpayer”.
The FTC has constantly challenged the concept of pay-for-delay, contending that they are anticompetitive and violate US antitrust laws. Last month, the country’s Supreme Court have agreed to hear arguments in the high-profile case of the FTC vs Watson Pharmaceuticals, whereby the agency claims that the latter and other generic drugmakers violated competition laws. The FTC is arguing that the companies accepted payments of $31-$42 million a year from Abbott Laboratories’ subsidiary Solvay for agreeing not to bring their cheaper generic versions of the topical synthetic testosterone product AndroGel to market until 2015.
‘Flawed’ report, says GPhA
In response to the FTC’s report, Ralph Neas, chief executive of the Generic Pharmaceutical Association (GPhA) said the agency is “wrong on the facts, wrong on the public policy and wrong on the law”. He added that if successful, “the FTC position would dramatically undermine the law of the land and cost patients and consumers billions of dollars every year”.
Mr Neas went on to say the FTC is “continuing to perpetuate the myth that pro-competitive, pro-consumer patent settlements are harmful to consumers – an unsubstantiated position that has repeatedly failed to receive support in both Congress and the courts”. Rather, “settlements have never prevented competition beyond the patent expiry, and generally have resulted in making lower-cost generics available months and even years before patents have expired”.
He argues that it is important to note that the FTC already has the authority to review and reject any patent settlement it deems to be unlawful. “If the agency thought any one of the settlements it is now criticising did not pass legal muster, the time to act was as it was considering the settlement, not by a press release after the fact”.
