FTC Asks To Restrict Pay-For-Delay Deals To Lower Consumers’ Health Care Costs

The Federal Trade Commission (FTC) has released a report of data pertaining to the 2011 fiscal year which showed that pharmaceutical companies continued an anticompetitive trend of paying potential generic rivals to delay the introduction of low-cost prescription drug alternatives for American consumers.

When too much is too much

If you’re like me, generic pharmaceutical drugs save my life, not only literally but fiscally as well. Generic versions of medications make affording medicine possible for so many American consumers, they also help hold down costs for taxpayer-funded health programs such as Medicare and Medicaid. Generic drug prices are typically at least 20 to 30 percent less than the name-brand drugs, and in some cases are up to 90 percent cheaper.

The report released shows that drug companies entered into 28 potential “pay-for-delay deals” in the fiscal year of 2011 which is from October 1, 2010 until September 30, 2011. Since the FTC started collecting data in 2003 this year and last year (31) have marked as the highest years of record deals. Overall, the agreements reached in the latest fiscal year involved 25 different brand-name pharmaceutical products with combined annual U.S. sales of more than $9 billion.

“While a lot of companies don’t engage in pay-for-delay settlements, the ones that do increase prescription drug costs for consumers and the government each year,” said FTC Chairman Jon Leibowitz. “Fortunately, Congress has the opportunity to fix this problem through the Joint Select Committee on Deficit Reduction — and save the government and American taxpayers billions of dollars.”

In recent years, certain brand-name companies have paid or otherwise compensated generic firms to settle their patent challenges and, in turn, delay the introduction of lower-cost medicines. An FTC staff study has found that patent settlements that include a payment or other compensation delay generic entry on average by 17 months longer than those that do not include a payment. According to the Congressional Budget Office, proposed legislation would reduce the federal deficit by $2.67 billion over 10 years.

Of those 28 settlements released in the study, 18 involved generics that were so-called “first filers,” meaning that they were the first to seek FDA approval to market a generic version of the branded drug, and, at the time of the settlement, were eligible to exclusively market the generic product for period of time. Because of the regulatory framework, when first filers delay entering the market, other generic manufacturers can also be blocked from entering the market, which makes such patent settlement deals particularly harmful to consumers.

In the past the FTC has challenged many of these patent settlement agreements in court and suggest that they are anticompetitive and violate United States antitrust laws – Source.

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To view the released report please view it here.

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