The U.S. Federal Trade Commission (FTC) has long been an outspoken critic of so-called pay-for-delay patent settlements between branded and generic drug manufacturers. The agency's latest study suggests there is still much work to be done, however, as the number of pharmaceutical cases flagged for potentially anticompetetive tactics rose from 28 in FY 2011 to 40 in FY 2012.
Pay-for-delay strategies essentially involve branded drug manufacturers making some form of payment to generic competitors to prevent lower-cost alternatives from coming to market. In approximately half of the cases identified in FY 2012, branded companies promised not to develop new authorized generics (AGs) that would directly compete with the competitor's current products.
"More and more branded and generic drug companies are engaging in these sweetheart deals, and consumers continue to pay the price," said FTC chairman Jon Leibowitz. "Until this issue is resolved, we will all suffer the consequences of delayed generic entry - higher prices for consumers, businesses and the U.S. taxpayer."
Whether these patent disputes are settled with cash, strategic marketing agreements or some combination of the two may be immaterial. FTC officials confirmed that any cases involving payment delay market entry for generic drugs by an average of 17 months. This could be all the more concerning in a first to file system, as restricting the market activity of generic drug manufacturers could also inhibit the derivative progress of that company's licensees.