Brand-name prescription drug companies reached 14 deals with generic manufacturers to delay sale of generics in FY 2007

May 28 2008

Brand-name prescription drug makers in fiscal year 2007 reached 14 agreements with generic drug makers to delay market entry of generic medications, according to a report released on Wednesday by the Federal Trade Commission, Reuters reports (Bartz, Reuters, 5/23).

Drug makers are required to report such deals to FTC under the 2003 Medicare law (Rugaber, AP/Bergen Record, 5/26). The report did not name which drugs were affected by the deals.

According to the report, there were 33 deals made between brand-name and generic drug makers in FY 2007, and 14 of the agreements resolved patent litigation on more than 13 brand-name drugs. In all 14 of the deals, the generic drug maker received some kind of compensation to delay market entry of a generic version of a drug. In 11 of the agreements, the brand-name drug maker agreed not to sell its own generic version when its patents expired, and in three deals, there was a side agreement on an unrelated issue that was to the generic drug maker's advantage (Reuters, 5/23). The report found that the number of agreements blocking new generics in FY 2007 was the same as in FY 2006. There were three such deals in FY 2005.

FTC has said that so-called "pay-for-delay" settlements harm consumers. The commission has sued to block some of the deals but "has had limited success," according to the AP/Bergen Record. FTC also supports legislation that would ban such deals (AP/Bergen Record, 5/26). According to Reuters, "Neither the Senate bill to ban the deals nor its companion in the [House] has made much headway because of opposition from pharmaceutical companies and makers of generic medicines." Democratic presidential candidate Sen. Barack Obama (Ill.) is among 10 co-sponsors of the Senate bill.

FTC Commissioner John Leibowitz said, "What [the report] shows is that this problem is persistent," adding, "It's becoming the new way to do business. It means that consumers in need of affordable drugs are going to get generics later, not sooner" (Reuters, 5/23). However, pharmaceutical companies and some generic drug makers say that the agreements can reduce costly litigation and that some of the deals still allow generic manufacturers to introduce generic drugs before their patents expire (AP/Bergen Record, 5/26).