[Dialogue] Generic Drug Payoff Draws Gov't. Interest

[Harry Wainwright]

Published on Tuesday, April 25, 2006 by the Associated Press
<http://www.ap.org> 

Generic Drug Payoff Draws Gov't. Interest 

by Andrew Bridges

 

Brand-name pharmaceutical companies have resumed paying generic drug
manufacturers to stay off the market under the terms of some legal
settlements, attracting renewed scrutiny from federal regulators, trade
officials said Monday.

For the first time since 1999, brand-name and generic drug makers are
entering patent challenge agreements under which the latter companies
receive compensation in exchange for agreeing to restrictions on their
ability to market generic versions of branded drugs.

Consumers usually save money if they can buy generic brands of drugs, which
spark price competition. Keeping generic competitors off the market allows
brand-name manufacturers to charge premium prices.

Three such settlements were reached in the 12 months ending Sept. 30, 2005,
according to a Federal Trade Commission report issued Monday. Roughly six
similar deals have been struck in the months since then, FTC Commissioner
Jon Leibowitz said.

Pharmaceutical companies ceased striking such agreements in the late 1990s
following several legal challenges mounted by the FTC, Leibowitz said.

Pharmaceutical companies have been emboldened by two recent court decisions
that sanctioned those types of settlements, Leibowitz said in remarks
prepared for a speech Monday in Philadelphia. The remarks were posted on the
FTCs Web site.

"We are seeing far more settlements today that potentially raise competition
concerns than before these decisions," Leibowitz said.

The FTC commissioner cited the recent example of Plavix, a blood-thinning
drug made by Sanofi-Aventis and distributed in the United States by
Bristol-Myers Squibb that has $3.8 billion in annual sales. The two
companies recently settled with Apotex Corp., which sought to market a
generic version of the drug.

Under the terms of that settlement, filed with the FTC, the two companies
will pay Apotex an undisclosed sum. Apotex in turn agreed to defer launching
its generic version of Plavix until 2011.

That deferral could cost consumers hundreds of millions of dollars,
Leibowitz said.

"Our staff will take a good hard look at this - as we should - and the
commission will decide what action to take, if any," he said.

The FTC has asked the Supreme Court to reverse an 11th Circuit Court of
Appeals decision in a similar case involving the drug company
Schering-Plough. If the Supreme Court doesn't, it could give brand-name and
generic companies "carte blanche to avoid competition and share resulting
profits," Leibowitz said.

A spokesman for the Pharmaceutical Research and Manufacturers of America
declined to comment. A spokeswoman for the Generic Pharmaceutical
Association said the group is reviewing the report.

The FTC said last month it planned to subpoena nearly 200 pharmaceutical
companies as part of a probe of possible anticompetitive practices in the
prescription drug industry.

The subpoenas, which require Office of Management and Budget approval, would
form part of an investigation into whether pharmaceutical companies are
stifling competition by releasing authorized generic copies of their own
brand-name drugs to coincide with the debut of generic challengers made by
competitors.

Copyright C 2006 The Associated Press

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