Battle over ‘pay-for-delay’ deals continues

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The US Federal Trade Commission (FTC) Chairman, Mr Jon Leibowitz, has been arguing for some months now that passing legislation to restrict pay-for-delay deals between brand name and generic drugmakers will save US consumers billions of dollars. However, a new report throws doubt on the figures used to estimate these savings.


Mr Leibowitz has claimed that the pay-for-delay practice “is dramatically increasing the cost of prescription drugs” and has maintained that restrictions would speed the arrival of low-cost generics by more than a year into the US market. He has based these conclusions on a Congressional Budget Office (CBO) study, which forecasts nearly US$2 billion in savings over the next 10 years, and an FTC study that estimates savings of US$3.5 billion annually.

The measure is modelled closely on S. 369, the Preserve Access to Affordable Generics Act, and was originally, bizarrely, attached to the War Funding Bill (HR 4899), but is now attached to the FY2011 Financial Services Appropriations Bill.

A new report, funded by drugmakers, claims “the CBO’s estimate of potential savings is likely to be significantly overstated”, adding that restrictions may have the opposite effect. “Under many circumstances, reverse payment patent settlements between branded and generic manufacturers can benefit competition and consumers,” the study says, “particularly by averting continued litigation that may well delay generic entry substantially”.

By their own admission, the FTC has to admit that most drug companies can and do settle patent litigation cases without branded companies paying generic firms not to compete. In the first nine months of 2010, 75% of all such settlements reported to the FTC did not involve a payment by the brand to the competing generic firm.

The US Generic Pharmaceutical Association praised the findings of the new report, adding that “making drug patent litigation settlements presumptively unlawful will cost, not save money for the US government and consumers. There are no examples of patent settlements that have delayed generic market entry beyond the date of the patent expiration. But there are many examples of settlements that have proven to be pro-competitive and pro-consumer by making lower-cost generics available months and even years before patents have expired.”

The FTC, however, is still pushing for the adoption of the language in the bill, which it believes will stop anticompetitive drug patent settlements.

Related articles

US bill to curb generic ‘pay-for-delay’ deals


US Generic Pharmaceutical Association. Press Release. GPhA Warns that House-Passed Curb on Settlements Will Delay Access to Affordable Medicines. 2 July 2010.

Federal Trade Commission. News Release. Statement by FTC Chairman Jon Leibowitz Regarding House Passage of Legislation To Stop Costly Pay-for-Delay Drug Settlements. 2 July 2010.

Congressional Budget Office Cost Estimate S. 369 Preserve Access to Affordable Generics Act. 28 January 2010.

Federal Trade Commission. News Release. FTC Testimony: Stopping “Pay-for-Delay” Drug Settlement Agreements is a Top Competition Priority. 27 July 2010.

Federal Trade Commission. Authorized Generics: An Interim Report of the Federal Trade Commission (June 2009). 24 June 2009.

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