‘Pay-to-delay’ pharmaceutical deals smack of illegal collusion
By Editorial Board, WashPost,
In 2006 Solvay Pharmaceuticals, the maker of the testosterone-therapy drug AndroGel, settled a dispute with a group of generic pharmaceutical companies, agreeing to allow would-be competitors into the market in 2015, five years before the AndroGel patent expires. So how is this bad for consumers in search of cheaper drugs?
In fact, the Federal Trade Commission (FTC) will argue Monday before the Supreme Court that this settlement and all others like it are so obviously anti-competitive that they should be presumed illegal. And the FTC has a very good case.
The reason lies in the fact that the generic pharmaceutical companies also agreed to take millions in cash from Solvay as part of the settlement. That arrangement, the FTC argues, stinks of illegal collusion — without which generic versions of the drug might have entered the market even earlier.
If a generic pharmaceutical company wants to introduce its own version of a brand-name drug without waiting for the relevant patent to expire, it can file a claim with the Food and Drug Administration, explaining why the patent is invalid or otherwise shouldn’t apply. The brand-name drug firm can then challenge the generic company in court, a proceeding that, if it goes in the generic’s direction, would lead to the near-immediate sale of a low-priced, off-brand version of the drug to consumers. But because litigation brings risks to both sides, many of these proceedings end in settlements. These involve an agreement on a date when generics can be introduced. Sometimes, they also involve the brand-name drugmaker paying its would-be competitor immense sums of cash.
(More here.)
In 2006 Solvay Pharmaceuticals, the maker of the testosterone-therapy drug AndroGel, settled a dispute with a group of generic pharmaceutical companies, agreeing to allow would-be competitors into the market in 2015, five years before the AndroGel patent expires. So how is this bad for consumers in search of cheaper drugs?
In fact, the Federal Trade Commission (FTC) will argue Monday before the Supreme Court that this settlement and all others like it are so obviously anti-competitive that they should be presumed illegal. And the FTC has a very good case.
The reason lies in the fact that the generic pharmaceutical companies also agreed to take millions in cash from Solvay as part of the settlement. That arrangement, the FTC argues, stinks of illegal collusion — without which generic versions of the drug might have entered the market even earlier.
If a generic pharmaceutical company wants to introduce its own version of a brand-name drug without waiting for the relevant patent to expire, it can file a claim with the Food and Drug Administration, explaining why the patent is invalid or otherwise shouldn’t apply. The brand-name drug firm can then challenge the generic company in court, a proceeding that, if it goes in the generic’s direction, would lead to the near-immediate sale of a low-priced, off-brand version of the drug to consumers. But because litigation brings risks to both sides, many of these proceedings end in settlements. These involve an agreement on a date when generics can be introduced. Sometimes, they also involve the brand-name drugmaker paying its would-be competitor immense sums of cash.
(More here.)
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