Deals to Restrain Generic Drugs Face a Ban - NYTimes.com

Deals to Restrain Generic Drugs Face a Ban - NYTimes.com
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The group plans to ask Congress on Wednesday to block business deals in which they say makers of name-brand drugs directly or indirectly pay generic makers to delay competition from cheaper generic alternatives.
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In recent years, critics say, deals between name-brand makers and generic makers have delayed the introduction of a range of generics including cancer drugs, antidepressants and prescription-strength antacids. The F.T.C. has estimated that such deals currently cost American consumers $3.5 billion a year.

“These are collusive, price-fixing deals,” said Representative Chris Van Hollen, Democrat of Maryland, who is one of those urging Congress to ban the arrangements. “It means the consumer pays a lot more for their pharmaceuticals.”

Opponents of the generic agreements — maligned as “pay for delay” deals — say they are standard industry practice and help prop up monopoly pricing.

Generics account for only about 22 percent of prescription drug spending in this country, although they represent nearly three-quarters of the prescriptions written, according to the research firm IMS Health. That means 78 percent of the nation’s drug bill goes toward the 25 percent of prescriptions written for name-brand medicines.

But representatives of branded drug and generic makers said that settlements were a legitimate and expedient way to resolve expensive and time-consuming patent litigation.

Moreover, Kathleen Jaeger, the president of the Generic Pharmaceutical Association, an industry trade group, contested the term “pay for delay.”

Settlements, she said, typically award the generic challenger the right to enter the market before a brand’s patent is due to expire, giving consumers earlier access to affordable drugs. And compensation, she said, is often for legitimate side deals, like the generic company’s supplying ingredients to the name-brand maker.

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Under Hatch-Waxman, the first generic to challenge a name-brand drug’s patent gains the exclusive right to sell its generic version for six months before other generic makers can enter the market. But Hatch-Waxman also gives drug makers who sue generic infringers an automatic 30-month stay of generic market entry so that litigation can proceed.

Rather than litigate cases to the end, though, many drug makers choose to settle with generic challengers. Sometimes, the parties negotiate an earlier market entry date for the generic, without the generic maker’s receiving additional compensation.

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