Pay-for-delay on the increase in the US

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During 2012 the number of potentially anticompetitive patent dispute settlements between brand-name and generics companies in the US increased significantly compared with 2011 according to a new report released on 17 January 2013 by the Federal Trade Commission (FTC).

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The report found that the number of settlements made during fiscal year 2012 (1 October 2011 to 30 September 2012) was 40 compared to only 28 in fiscal year 2011, making it the highest of any year since the FTC started collecting data on this issue in 2003. Moreover, more than half (19) of the settlements that were made involved the promise from the brand-name manufacturer not to develop or market an authorized generic drug.

The agreements reached in fiscal year 2012 involved 31 different brand-name pharmaceutical products with combined annual US sales of more than US$8.3 billion.

FTC Chairman, Dr Jon Leibowitz said that ‘the problem of pay-for-delay is getting worse, not better’. Adding that ‘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 [drug] entry–higher prices for consumers, businesses, and the US taxpayer.’

The FTC believes that by delaying the entry of cheaper generics, pay-for-delay deals cost Americans US$3.5 billion annually and add to the federal deficit. The Congressional Budget Office has estimated that legislation restricting these agreements would reduce the debt by almost US$5 billion over the next decade.

The FTC has long been critical of these deals and has been campaigning for Congress to pass legislation to outlaw such payments as anticompetitive [1].

The Generic Pharmaceutical Association (GPhA), however, disagrees with FTC’s standpoint, arguing that in fact such deals increase access to affordable medicines by making generics available sooner than would otherwise be possible, thus saving patients hundreds of billions of dollars. The GPhA backs up its claims with a 2011 analysis by the Royal Bank of Canada (RBC), which found that the ability to settle patent challenges dramatically increases opportunities for consumer savings. The RBC analysis demonstrated that in cases where companies litigated to a conclusion, generics came to market prior to patent expiration in only 48% of cases. In those cases where settlements resulted, generics came to market prior to patent expiration in 76% of cases.

Editor’s comment
So do pay-for-delay deals delay the entry of generics or not? Would legislation to prevent these deals bring generics to market sooner? One thing most people can agree on though is that affordable medicines should be available as soon as possible. But what is the best way to make this happen?

Please feel free to share your thoughts via email or in the comments section below. What are your views on the continuing pay-to-delay debate? Should legislation be introduced banning these deals? Or do these deals result in generics being available sooner than would otherwise be possible?

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1.  GaBI Online - Generics and Biosimilars Initiative. History and future of pay-for-delay []. Mol, Belgium: Pro Pharma Communications International; [cited 2013 Jan 24]. Available from:

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Source: FTC, GPhA

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