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Senior Health & Medicine News
Brand-Name Drug Companies Paying Generic Makers to Stay
Out of Market
 April 26, 2006 – Yesterday, many senior citizens
welcomed the news of two new generic drugs being approved by
the Food and Drug Administration,
since an increasing number of studies show seniors can save large amounts of
money on generic drugs in the Medicare prescription drug program. The
bad news, however, was also reported yesterday by KaiserNet.org – the
brand-name pharmaceutical companies are paying off the generic drug
makers to not challenge their patents.
 Brand-Name Drug Companies Increasingly Reach Deals
With Generic Companies To Delay Generic Drug Market Entry, FTC Report
Says
Brand-name pharmaceutical companies in the past two
years have resumed the practice of entering into agreements in which
they pay generic drug makers to drop challenges to patents, according to
a
Federal Trade Commission report, the
Washington Post reports.
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According to the report, three such agreements were
formed in fiscal year 2005, and at least seven have been made so far in
this fiscal year (Kaufman, Washington Post, 4/24). The deals are the
first such agreements since 1999, the
AP/San Jose Mercury News reports (AP/San Jose Mercury News, 4/25).
The FTC, since the late 1990s, had prevented
brand-name drug makers from paying generic rivals to drop patent
challenges, the Post reports.
However, late last year, the U.S. Court of Appeals
for the 11th Circuit ruled that FTC was beyond its authority when it
blocked a deal between
Schering-Plough and
Upsher-Smith Laboratories over the drug K-Dur 20, a treatment for
high blood pressure and congestive heart disease. FTC, which has
appealed to the Supreme Court, argues that the deals are
anti-competitive and unfair to consumers.
FTC Commissioner Speech
In a speech on Monday to the In-House Counsel's Forum on Pharmaceutical
Antitrust, FTC Commissioner Jon Leibowitz said that if the appeals court
decision remains in effect, drug makers will have "carte blanche to
avoid competition and share resulting profits."
Leibowitz said the agreements mutually benefit the
brand-name and generic drug makers because the brand-name company gets
to maintain its patent exclusivity, while the generic competitor
receives a payment.
In addition, the "generic companies ... often enter
into agreements to produce lower-priced version of the brand-name
company's drug at a predetermined date -- far in the future," the Post
reports.
For example,
Cephalon earlier this year made agreements with four generic
companies over the drug Provigil, a sleep disorder treatment. Under the
agreements, the generic companies pledged to stay out of the market
until 2011, and Cephalon agreed to pay them licensing payments of $136
million.
Leibowitz said, "Until recently, payments by
brand-name companies to generics were the exception, but now they're the
rule," adding, "They appear to be a new way to do business, and that's
very troubling. Hopefully the Supreme Court will take our case and
reverse." The
Pharmaceutical Research and Manufacturers of America and the
Generic Pharmaceutical Association declined to comment on
Leibowitz's remarks or the FTC report (Washington Post, 4/24).
>> The FTC
report is available
online. Note: You must have Adobe Acrobat Reader to view the report.
"Reprinted with
permission from kaisernetwork.org You can view the entire
Kaiser Daily Health Policy Report, search the archives, and sign up
for email delivery at
www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser
Daily Health Policy Report is published for
kaisernetwork.org, a free service of The Henry J. Kaiser Family
Foundation. © 2006 Advisory Board Company and Kaiser Family Foundation.
All rights reserved.”
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