FTC Chairman, Members of Congress Call for Legislation to End Sweetheart Pay-for-Delay Deals That Keep Generic Drugs Off the Market

Federal Trade Commission Chairman Jon Leibowitz and key members of Congress, including Representative Chris Van Hollen, Chairman Bobby Rush, and Representative Mary Jo Kilroy, today renewed their call for legislation that would put an end to anticompetitive patent settlements, which drug manufacturers have been using to keep less-expensive medicines off the market and charge consumers billions of dollars a year in higher drug prices.

Speaking at a joint press conference, Leibowitz said consumers are forced to pay inflated prices or forgo their medication because of these “pay-for-delay” deals, in which brand-name drug makers pay their generic competitors to keep cheaper alternatives off the market. He urged Congress to adopt a provision as part of the health care reform bill to stop pay-for-delay agreements.

“Pay-for-delay deals are a bad prescription for America: when drug companies agree not to compete, consumers lose,” Leibowitz said. “Ending this practice as part of health care reform is one simple, effective, and straightforward way for Congress to help control drug costs.”

In a written statement, FTC Commissioner J. Thomas Rosch said, “As I testified last year before Chairman Rush’s subcommittee, almost all, if not all, reverse payment agreements . . . delay generic competition longer than it might otherwise occur.”

At today’s event, Leibowitz also announced that the FTC staff has issued a new study, entitled “Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions,” that summarizes the savings lost to U.S. consumers during the past six years through such pay-for-delay deals in the drug industry, and found that the number of agreements with payment and delay has increased from zero in 2004 to a record 19 agreements in Fiscal Year 2009.

According to the study, which can be found on the FTC’s Web site at http://www.ftc.gov/os/2010/01/100112payfordelayrpt.pdf, the cost to consumers from pay-for-delay deals is an estimated $3.5 billion per year – or $35 billion over 10 years. The study also found that settlement deals featuring payments by branded drug firms to a generic competitor kept generics off the market for an average of 17 months longer than agreements that do not include a payment. Most of the agreements reached since 2005 are still in effect, according to the study, and they currently protect at least $20 billion in sales of brand-name drugs from generic competition.

All recent staff reports on pharmaceutical patent settlements, as well as other important information resources, can be found on the FTC’s Web site at http://www.ftc.gov/opa/reporter/payfordelay.shtm.

Finally, today the FTC posted a new pill-shaped “hot topics” button on its Web site, ftc.gov, called “Pay-for-Delay” that consumers and others can use to get more information about the agency’s work in the area of branded and generic drug competition, including recent cases alleging anticompetitive pay-for-delay drug settlements, speeches on this issue, and related congressional testimony.

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.

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