The Cost to Consumers when Drug Companies Sue Each Other

Last week, the Federal Trade Commission (FTC) released a report with the boring title “Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement and Modernization Act of 2003.”

But the story it tells is hardly dull, and it has implications for anyone who takes prescription medicine. If you want to read the whole report, spoiler alert! It concludes “pharmaceutical companies continued a recent anticompetitive trend of paying potential generic rivals to delay the introduction of lower-cost prescription drug alternatives for American consumers.”

The Washington Post was less than impressed with Big Pharma’s “pay-for-delay settlements.” As analyzed by FDA Law Blog, there were 43 more of these unsavory brand/generic settlements in fiscal year 2011 than 2010; 28 final settlements involved 25 different branded Big Pharma drugs that both compensated the generic manufacturer and restricted it from marketing the less expensive version of the brand med.

In 2004, the FTC didn’t find a single settlement in a patent litigation matter involving drug makers that raised pay-for-delay concerns.

The commission concluded that fiscal year 2011 “witnessed the continued trends of (a) record numbers of brands and generics resolving patent litigation prior to a final court decision on the merits and (b) significant numbers of such settlements potentially involving pay-for-delay.”

It seems obvious that, as The Post notes, “Such pay-for-delay arrangements hurt consumers and increase costs for federal programs such as Medicare and Medicaid,” but the Generic Pharmaceutical Association (“GPhA”) disagrees. It said that “the FTC continues to miss the fundamental point: Patent settlements speed up the availability of less costly generic drugs and save money for everyone; banning settlements and forcing drugs makers to continue lengthy litigation with uncertain outcomes will be costly.”

It’s saying that when generic companies litigate drug patent cases to conclusion (as opposed to settling the case earlier), the generic drugs are delayed from entering the market at least until the brand patent expires.

This expensive, consumer-averse mess would be eliminated by enacting the Preserve Access to Affordable Generics Act. It would effectively ban patent settlement agreements and empower the FTC to challenge suspicious deals. It would accept certain deals if “clear and convincing evidence” supports the notion that the “pro-competitive benefits outweigh the anti-competitive harms.” The nonpartisan Congressional Budget Office estimates that the government would save $3 billion over 10 years by eliminating pay-for-delay deals.

The FTC and the Obama administration have urged the Joint Select Committee on Deficit Reduction (the “super committee” charged with trying to find federal budgets cuts by the end of November) to include the legislation in its deficit reduction plan.

You wonder if all the zealots keen to limit patients’ right by unreasonably capping medical malpractice awards (euphemistically referred to as “tort reform”) are as eager to put a stop to what looks awfully like pharmaceutical company collusion.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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