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WHAT IT MEANS AND WHY IT'S IMPORTANT — Patent settlements between branded and generic drug companies, sometimes called “pay-for-delay” deals, aren’t going away any time soon.
(THE NEWS: Report: Banning 'pay for delay' settlements likely won't happen. For the full story, click here)
Critics of the deals already have had a tough enough time getting them banned. The apparent absence of language banning the deals from the final version of the Senate appropriations bill, not to mention the Republican majority in the House next year, makes a ban unlikely to happen. And in September, the U.S. Second Circuit Court of Appeals in New York upheld a ruling it had made in favor of the deals in a case over a settlement between Bayer and Teva Pharmaceutical Industries subsidiary Barr Labs concerning a generic version of the anthrax treatment Cipro (ciprofloxacin).
The Federal Trade Commission and members of Congress, including Sen. Herb Kohl, D-Wis., had fought long and hard against the deals, with the backing of advocacy groups and The New York Times’ editorial board, contending that they cost consumers $3.5 billion a year and cause generic drug launches to be delayed by an average of 17 months longer than when no settlements are in place.
Supporters of the deals, on the other hand, pointed to a report by RBC Capital Markets showing that generic drug companies prevailed in 76% of cases in which a settlement was reached, but only 48% of cases that went to trial. They even considered the term “pay-for-delay” a misnomer because it would be illegal for a generic drug company to delay launch after the branded drug’s patent had expired, and most of the settlements allow generic launch months or even years ahead of patent expiration.