FTC REPORT: DRUG COMPANIES PAY TO DELAY GENERICS

In 2007, brand-name and generic drug manufacturers reached secret deals to delay introduction of cheaper generic substitutes for 13 brand-name drugs, according to a new report by the Federal Trade Commission (FTC).

These agreements are commonly referred to as pay-for-delay agreements because usually the generic drug manufacturer receives some form of compensation from the brand-name drug manufacturer to delay putting the generic on the market. These agreements result from lawsuits over whether a generic drug-maker is violating a brand name drug patent when it introduces its version.

Consumer organizations opposed to such agreements believe that they are harmful to consumers because generic drugs are entering the market later. On the other hand, pharmaceutical companies argue that the settlements reduce litigation costs, which conserve both private and public resources, and in some cases allow generic drugs to enter the market before the brand-name patent expires.

Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), pharmaceutical companies are required to report such agreements to the FTC. Each year the FTC publishes a summary of the agreements filed and compares them with the agreements filed in previous years. The FTC also reported that in 2007 there were 19 additional agreements that settled pending patent litigation and had an impact on when a generic drug would enter the market.

In 2007, Congressman Henry Waxman, Democrat of California, and Senator Herb Kohl, Democrat of Wisconsin, introduced the Preserve Access to Affordable Generics Act (H.R. 1432/S. 316), which would prohibit brand-name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market, but it has not yet been voted on by Congress.

-Adapted from MEDICARE WATCH , a biweekly electronic newsletter of the Medicare Rights Center,Vol. 11, No. 12: June 10, 2008.

06/08