WASHINGTON - Drug companies
increasingly are reaching legal settlements that delay the
introduction of cheaper generic medicines and cheat Americans
of billions of dollars a year in savings, federal regulators
on Wednesday told lawmakers seeking to ban the
agreements.
The Federal Trade
Commission and others allege the settlements allow brand-name
pharmaceutical companies to pay off would-be generic
competitors, which then agree to delay introduction of their
less costly but otherwise identical versions of the original
medicines.
The FTC issued a
report Wednesday, to coincide with a Senate Judiciary
Committee hearing on the topic, that shows the settlements
have become more common since two 2005 appeals court decisions
upheld their legality.
In the 12-month
period that ended Sept. 30, half of the 28 patent litigation
settlements between brand-name and generic drug makers
included such an agreement, according to the FTC. It tallied
just three the previous fiscal year and none the year before
that.
'Pay-for-delay
settlement'
"Sadly, the
incentive to enter in such pernicious pay-for-delay
settlements are substantial," FTC commissioner Jon Leibowitz
told lawmakers.
In a typical
settlement, the payment is still less than the potential loss
in sales to a brand-name company once a generic competitor
enters the market, said Michael Wroblewski, of Consumers
Union. And the generic manufacturer makes more from the
payment that it would from actually selling its version of a
drug, he said.
"The losers are
American consumers, who pay high drug prices for years to
come," said Sen. Herb Kohl, D-Wis. Kohl, joined by Democratic
and Republican colleagues, reintroduced legislation Wednesday
to ban the agreements.
The agreements
settle legal challenges mounted by the generic manufacturers
seeking to enter the market for a drug before its patent
expires. In doing so, they thwart the intent of the 1984 law
that made such challenges possible, said Sen. Patrick Leahy,
D-Vt.
Costs passed to the
consumer
The pharmaceutical
industry maintains the settlements avoid or cut short
prolonged and costly litigation. Those costs ultimately are
passed to the consumer.
"Courts and experts
have stated unequivocally that settlement of litigation should
be encouraged and that settlement of patent litigation can
benefit consumers. Blanket prohibitions on certain types of
settlements could force both sides to spend valuable resources
litigating their patent dispute to judgment," said former Rep.
Billy Tauzin, R-La., president and chief executive of the
Pharmaceutical Research and Manufacturers of
America.
One of the
co-authors of the 1984 law, Sen. Orrin Hatch, R-Utah,
suggested reviewing the settlement agreements on a
case-by-case basis and not banning them
outright.
And Bruce
Downey, chairman and chief executive officer of Barr
Pharmaceuticals Inc., a major generic drug maker, said the proposed law
could discourage generic companies from challenging patents held
by pharmaceutical companies - and settling those
challenges.
Downey said
settling challenges to the patents on the antidepressant
Prozac and cancer drug tamoxifen allowed his company to
introduce lower-price generic versions of the two medicines
before they lost patent protection, saving consumers more than
$1.5 billion.
For more
information on this story visit:
http://www.msnbc.msn.com/id/16673463/wid/11915773?GT1=8921
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