Drugmakers Still Pay to Keep Generics Off Market, FTC Says

Brand-name drugmakers are continuing an “anticompetitive” trend of paying generic-drug manufacturers to delay introducing their lower-cost products, according to a Federal Trade Commission report.

Drug companies completed 28 potential deals to delay generics in the fiscal year that ended Sept. 30, according to the report released today. That’s just under the record of 31 such agreements in the previous fiscal year, the FTC said.

The commission has been pressing Congress and the courts to limit the deals, which the FTC said delay the introduction of cheaper drugs. Drugmakers have said that the agreements cut legal costs and in some cases speed up the introduction of the less-expensive drugs.

“While a lot of companies don’t engage in pay-for-delay settlements, the ones that do increase prescription drug costs for consumers and the government each year,” FTC Chairman Jon Leibowitz said in a statement.

The 28 deals involved 25 different brand-name drugs with combined U.S. sales of more than $9 billion, according to the FTC. The agreements, which drugmakers are required to report to the FTC, are otherwise confidential, said Mitchell Katz, a commission spokesman.

FTC Lawsuits

The FTC has sued Brussels-based Solvay SA (SOLB) along with generic-drug manufacturers Par Pharmaceutical Cos. of Woodcliff Lake, New Jersey, and Watson Pharmaceuticals Inc. (WPI) of Parsippany, New Jersey, over a deal involving the drug AndroGel, a testosterone replacement therapy.

Cephalon Inc. (CEPH) also is being sued by the FTC, which contends that the Frazer, Pennsylvania-based drugmaker paid more than $200 million for generic companies to drop their challenge to patents on its sleep-disorder drug Provigil.

Prices for generics typically are 20 percent to 30 percent less than the name-brand counterparts, and in some cases are as much as 90 percent cheaper, according to the FTC.

Brand-name companies sometimes pay or provide other compensation to generic companies to settle patent challenges and delay introduction of the cheaper products, the FTC said.

The commission, with its opposition to the settlements, is creating a barrier for drugs to get to market, said Ralph Neas, president and chief executive officer of the Washington-based Generic Pharmaceutical Association.

“Forcing drugmakers to continue lengthy litigation with uncertain outcomes will be costly,” he said in a statement.

The deals are an important way to ensure patent holders’ rights, said Diane Bieri, executive vice president and general counsel at the Pharmaceutical Research and Manufacturers of America, the Washington-based trade association for brand-name drugmakers.

“Patent settlements are a vital aspect of a patent owner’s ability to protect intellectual property,” she said in a statement.

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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