Drug makers are using a novel tactic to delay competition from lower-cost generic medicines, and it’s costing American consumers about $3.5 million per year, says a new report by the Federal Trade Commission.
Up to now, attention has focused on the controversial practice of brand-name manufacturers agreeing in patent litigation settlements to pay generic competitors to withhold their products from the market. But according to the FTC, some drug makers have found a less direct way to achieve the same end: Pledging to withhold their own generic medicines if generic companies agree to delay competing with the brand-name products.
The commission described such arrangements as illegal sweetheart deals, a charge adamantly denied by the generic drug industry, the New York Times reports.
According to the FTC, the pay-for-delay strategy is hurting the consumer by reducing competition between rival versions of generic drugs–the one made by the generics company and the one brought out by the brand-name manufacturer once its patent protection ends. When a brand-name generic drug and a truly generic drug simultaneously enter the market, the report says, prices drop anywhere from 4 to 8 percent in the first six months.
The report found that a total of 15 drug patent settlements involved promises from brand-name companies not to market their brand-name generic if the generic companies agreed to delay their market entry.
“Brand-name drug companies use anticompetitive agreements to keep prices high and overcharge consumers,” Rep, Henry Waxman (D-CA) said in a prepared statement. “The FTC and Congress should act to halt these abusive practices.”
The study is the latest chapter in the ongoing examination of patent settlements of generic drugs. While the FTC claims the system is flawed, industry groups, like the Generic Pharmaceutical Association, say that patent settlements are responsible for more generic drugs reaching the market.
TIM BELLA
