Trade Agency Wants to End Deals Delaying Generics

The following is excerpted from a May 6, 2008 Reuters article by Diane Bartz:

A practice by major pharmaceutical companies of paying generic drug companies to delay putting cheaper medicines on the market violates federal law and must be stopped, a top ranking official with the U.S. Federal Trade Commission (FTC) said.

These so-called reverse payments are made after a generic company files with the Food and Drug Administration (FDA) to sell a generic version of a drug still under patent.

The maker of the original drug often sues for patent infringement, but sometimes these lawsuits are settled when the maker of the brand name drug gives the generic company money to bring the generic drug to market before the patent expires but much later than the generic company had wanted, a government source explained.

The settlements can be structured to make it appear that the drug companies are paying for something other than delayed generic entrance, according to the government source and an industry legal source, both of whom asked not to be identified because they are not authorized to speak to reporters.

Another pharmaceutical industry source, who asked not to be named, confirmed that reverse payments would often be structured so that it would look like the brand-name drug maker was paying for something else. "It's never: 'Here's $50 million, don't launch the product,"' the source said. "I don't think there's a place for those reverse payments."

The FTC says such payments violate antitrust law by dividing up the market.

Generics can be 20 percent to 90 percent cheaper than brand-name drugs.

All drug companies are required to report any patent settlement to the FTC.

Read the full article here.