FTC Reports an Increase in Anticompetitive Activities Among Drug Makers

In a new report issued by the Federal Trade Commission (FTC), FTC analysts reported that the number of potentially anticompetitive patent dispute settlements between branded and generic drug companies increased from 28 in 2011 to 40 in 2012.  According to the report, companies filed a total of 140 final patent settlements.  Of those, 40 settlements contained a payment to a generic manufacturer and also restricted the generic’s ability to market its product. In addition, the study found that in 19 of these settlements, branded firms may have used the promise that they would not develop or market an authorized generic as a payment to stall generic drug firms from marketing a competing product.

The FTC contends, in an accompanying press release, that patent settlements that include a payment delay generic entry by 17 months longer, on average, than those that do not include some form of payment. By delaying the entry of cheaper generics, they say, pay-for-delay deals cost Americans $3.5 billion annually and will add to the federal deficit.  The FTC supports legislation that would restrict pay-for-delay settlements.

The Generic Pharmaceutical Association (GPhA) took issue with the FTC report. In a strongly worded statement, Ralph G. Neas, President and CEO of GPhA, said, "The FTC is wrong on the facts, wrong on the public policy and wrong on the law.”  According to GPhA, settlements actually help bring affordable generic medicines to market sooner, resulting in billions of dollars in savings to consumers.

Neas concludes, “Like the FTC, we oppose anti-competitive and anti-consumer settlements. That's why we support provisions in the 2003 Medicare Modernization Act that require FTC review of all brand-generic patent settlements. An outright ban would have the unintended consequence of preventing pro-consumer settlements that actually allow generic competition sooner than if the generic company took the case to conclusion and lost—which is a possibility in every single patent case."