FTC Staff Report Finds 60 Percent Increase in Pharmaceutical Industry Deals That Delay Consumers’ Access to Lower-Cost Generic Drugs

Pharmaceutical companies struck an unprecedented number of deals in Fiscal Year (FY) 2010 in which the manufacturers of branded products paid potential generic rivals and generic companies agreed to defer the introduction of lower-cost medicines for American consumers, according to an overview of industry data released by the staff of the Federal Trade Commission.

The FTC staff report found that the number of these deals skyrocketed more than 60 percent, from 19 in FY 2009 to 31 in FY 2010. Overall, the agreements reached in the latest fiscal year involved 22 different brand-name pharmaceutical products with combined annual U.S. sales of about $9.3 billion.

“Collusive deals to keep generics off the market are already costing consumers and taxpayers $3.5 billion a year in higher drug prices,” said FTC Chairman Jon Leibowitz. “The increasing number of these deals is a win-win proposition for the pharmaceutical industry, but a lose-lose for everyone else.”

Millions of Americans rely on generic drugs to make medicine affordable, and generics also help hold down costs for taxpayer-funded health programs such as Medicare and Medicaid. Generic prices are typically at least 20 to 30 percent less than the name-brand drugs, and in some cases are up to 90 percent cheaper.

In recent years, certain brand-name companies have paid generic challengers to settle their patent challenges and delay the introduction of lower-cost medicines. An FTC staff study has found that such settlements that include a payment delay generic entry by 17 months longer on average than those that do not include a payment.

The FTC has challenged a number of these patent settlement agreements in court, contending that they are anticompetitive and violate U.S. antitrust laws. The agency also has supported legislation in Congress that would prohibit settlements that increase the cost of prescription drugs.

The staff report summarizes data on patent settlements filed with the FTC and the Department of Justice during FY 2010. There were a total of 113 final patent settlements. Of those, 31 settlements contained a payment to a generic manufacturer and also restricted the generic’s ability to market its product. Of those 31 settlements, 26 involved generics that were so-called “first filers,” meaning that they were the first to seek FDA approval to market a generic version of the branded drug. Because of the regulatory framework, when first filers delay entering the market, other generic manufacturers can also be blocked from entering the market, which makes such patent settlement deals particularly harmful to consumers.

The staff report issued today also cited three other settlements in FY 2010 that did not record any explicit compensation for the generic, but provided other assurances that may have had the effect of compensating the generic for delaying entry.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FY10 MMA Report)

IR Press

Share
Published by
IR Press

Recent Posts

Treasury Issues Final Rule Expanding CFIUS Coverage of Real Estate Transactions Around More Than 60 Military Installations

WASHINGTON – Today, the U.S. Department of the Treasury (Treasury), as Chair of the Committee…

4 days ago

U.S. Department of the Treasury’s CDFI Fund and Federal Housing Finance Agency Collaborate to Bolster CDFI Access to Capital

WASHINGTON—Today, the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) and…

4 days ago

Report on U.S. Portfolio Holdings of Foreign Securities at Year-End 2023

Washington – The findings from the annual survey of U.S. portfolio holdings of foreign securities…

5 days ago

READOUT: U.S. Department of the Treasury Hosts Roundtable Discussion on the Financial Sector’s Response to Recent Hurricanes

WASHINGTON – The U.S. Department of the Treasury hosted a roundtable on October 30 with…

5 days ago

READOUT: Sixth Meeting of the Financial Working Group Between the United States and the People’s Republic of China

WASHINGTON – The United States and the People’s Republic of China held the sixth meeting…

5 days ago

Treasury Sanctions Key Members of La Linea, a Group Involved in Trafficking Fentanyl into the United States

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned…

5 days ago