GPhA responds to FTC's attempt to quash 'pay-for-delay' deals

WASHINGTON The Federal Trade Commission again is going after settlements between branded and generic drug companies that it calls anticompetitive, the agency said.

In testimony Wednesday before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, FTC chairman Jon Leibowitz spoke of the FTC’s goal of eliminating the patent settlements, which it derides as “pay-for-delay” deals. “Years of experience have proven that competitive markets work better than anything else to bring consumers lower prices, greater innovation and more choices among products and services,” Leibowitz said.

In a typical patent settlement scenario, a generic drug company will challenge a brand company’s patent on a drug by filing a regulatory approval application for a generic version with the Food and Drug Administration containing a Paragraph IV certification. Provided for under the Hatch-Waxman Act of 1984, the law that created an abbreviated approval pathway for generic drugs, a Paragraph IV certification is a legal assertion that the patent is invalid, unenforceable or won’t be infringed by a generic version of the drug.

The brand drug company typically will respond with a patent infringement suit, and often, rather than going to trial, the two companies will reach a settlement whereby the generic drug company agrees to hold off launching its version in exchange for the brand company paying money or agreeing not to launch an “authorized generic,” essentially the branded drug sold under its generic name at a discount. But in most cases, the settlements allow the generic company to launch its version months, or even years, ahead of the patent expiration.

The Generic Pharmaceutical Association, an industry lobbying group that has long criticized the FTC on the issue of patent settlements, lashed out at Leibowitz’s testimony. “Following the testimony today by commissioner Leibowitz before a Senate judiciary subcommittee, GPhA feels compelled to set the record straight,” GPhA president and CEO Kathleen Jaeger said. “The fact is that it is patents, not settlements, that protect the brands from generic competition. Despite claims to the contrary, settlements actually help bring affordable generic medicines to market sooner, to the benefit of consumers and the healthcare system.”