There has been a significant rise in the number of Potential-Pay-for-Delay settlements in the US between branded pharma companies and generic drug makers, resulting in a delay in the sale of cheaper drugs, according to a Federal Trade Commission (FTC) report.
Forty of these agreements were made in the 2012 fiscal year – spanning from 1 October 2011 through 30 September 2012 – up from 28 deals in the previous fiscal year.
The FTC believes that in recent years there has been a growing trend of brand-name companies paying generic firms to settle their patent challenges and delay the introduction of lower-cost medicines. The FTC says this can delay a generic drug entering the market by 17 months longer, on average, than patent settlements that do not include some kind of payment.
The FTC staff report also discovered that in nearly half of these settlements branded firms may have promised that they would not develop or market an authorised generic (Ag) as a payment to stall generic drug firms from marketing a competing product, greatly undermining competition in the market.
These agreements involved 31 different brand-name pharmaceutical products with combined annual US sales of more that $8.3bn.
Generic drugs save taxpayer funded healthcare schemes Medicare and Medicaid millions of dollars a year and help make medicines affordable to millions of Americans. The annual cost to Americans is $3.5bn annually, says the FTC.
The Congressional Budget Office has estimated that legislation restricting these agreements would reduce the country’s debt by almost $5bn over the next decade.
"Sadly, this year’s report makes it clear that the problem of pay-for-delay is getting worse, not better," said FTC chairman Jon Leibowitz.
"More and more brand and generic drug companies are engaging in these sweetheart deals, and consumers continue to pay the price. 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’s Bureau of Competition works alongside the Bureau of Economics to investigate alleged anticompetitive business practices and if appropriate recommends that the Commission take law enforcement action.
