FTC, drug cos. clash over patent settlements

It has become a perennial issue, and one that is likely to crop up at least once this year: patent settlements.


The Federal Trade Commission has repeatedly assailed patent settlements between branded and generic drug companies, branding many of them as “pay-for-delay” deals and alleging that they cost the healthcare system billions per year by delaying the entrance of generic drugs onto the market. Meanwhile, the drug companies say that the deals — which result from attempts by generic drug companies to gain Food and Drug Administration approval for a drug after the branded drug’s market exclusivity period has expired, but before its patent expires — usually ensure that generic drugs reach the market well ahead of patent expiration. 


Where these deals attract the FTC’s ire is when a generic company agrees not to launch its drug immediately in exchange for a “payment” from the branded drug company, which can come in the form of cash or, more often, a pledge by the branded company not to launch its version of the drug under its generic name at a reduced price — also known as an authorized generic — during the generic drug’s 180-day market exclusivity period.


Members of Congress have attacked the deals as well. In November 2011, Sen. Jeff Bingaman, D-N.M., introduced the Fair Generics Act, which would revoke the 180-day exclusivity period for a generic company that enters such a patent settlement deal. “The Fair Generics Act is an important step in addressing the root cause of the growing cost of health care — the delay of generic drugs entering the market,” Bingaman said, according to the Congressional Record.