FTC Seeks Ban On Pay-For-Delay Deals

Patent dispute settlements in which brand-name pharmaceutical companies pay generics competitors to delay entry into the market are costing consumers $3.5 billion per year, the Federal Trade Commission said last week. Eliminating these "anticompetitive" pay-for-delay deals is one of the commission's highest priorities, FTC Chairman Jon Leibowitz says. He wants Congress to include a provision in the final health care reform legislation that would block generic-delaying settlements. Since 2005, the number of pay-for-delay deals has increased following a number of court decisions that have "misapplied the antitrust law" and upheld the agreements, according to the FTC analysis. "Most of these agreements are still in effect. They currently protect at least $20 billion in sales of brand-name pharmaceuticals from generic competition," the report says. The drug industry argues that most compensation agreements are pro-consumer because they still allow generic manufacturers to introduce cheaper drugs before the patents expire on their brand counterparts. Similar questions are now being raised in Europe (see page 6).