FTC claims settlements delay inexpensive generics

WASHINGTON The Federal Trade Commission has announced that pharmaceutical companies are using legal settlements with generic drug makers to delay the introduction of less expensive medicines, according to the Associated Press.

In a 12-month period that ended last Sept. 30, 14 of 33 agreements to settle patent litigation between brand-name drug companies and generics included both a restriction on the generic company’s ability to market a drug and compensation to the generic manufacturer.

The FTC has had limited success in preventing settlements. Two appeals courts ruled in 2005 that similar agreements reached by Schering Plough and AstraZeneca with generic companies were legal. More recently, the FTC accused of Cephalon of paying four generic companies $200 million to hold-off on producing a generic version of its sleep disorder drug Provigil.

Settlements with restrictions on generic drugmakers increased from three in fiscal year 2005 to 14 in 2006, the same total as last year, the agency’s report said. Drug companies are required to report the settlement of patent litigation with generic drugmakers under a 2003 law.

“Pay-for-delay settlements continue to proliferate,” FTC Commissioner Jon Leibowitz said in a statement. “That’s good news for the pharmaceutical industry, which will make windfall profits from these deals. But it’s bad news for consumers, who will be left footing the bill.”

The most common form of compensation by the drug companies to generics, included in 11 of the 14 settlements, was an agreement not to introduce a competing generic drug once the generic company was able to introduce its product, the FTC said. In the other three cases, the companies reached side deals that allowed the generics to market products that were not the subject of the patent litigation, the agency said.