FTC Staff Issues FY 2013 Report on Branded Drug Firms’ Patent Settlements with Generic Competitors

In Fiscal Year 2013, companies filed a total of 145 final patent dispute settlements, of which 29 created potential “pay-for-delay” agreements between branded and generic drug companies, according to a new Federal Trade Commission staff report.  Although the number of potential pay-for-delay settlements is down from FY 2012, it is similar to FY 2010 and 2011.

Those 29 settlements potentially involve pay-for-delay because the brand manufacturer compensated the generic manufacturer and the generic manufacturer was restricted from marketing its product in competition with the branded product for some period of time. The 29 settlements involve 21 different branded pharmaceutical products, with combined annual U.S. sales of approximately $4.3 billion.

Of the 29 potential pay-for-delay settlements, 13 involved generics that were so-called “first filers,” meaning the companies were the first to seek FDA approval to market a generic version of the branded drug, and, at the time of the settlement, were eligible to market the generic product for 180 days without competition from other non-first filing generics. Under FDA regulations, when first filers delay entering the market, other generic manufacturers cannot enter, which makes these patent settlement deals particularly harmful to consumers.

Generic drugs are the key to making medicines affordable for millions of American consumers, and to helping hold down costs for taxpayer-funded health programs such as Medicare and Medicaid.

The report is based on patent dispute settlements filed by pharmaceutical companies with the FTC and the Department of Justice during FY 2013 pursuant to the Medicare Modernization Act of 2003. According to the report, the vast majority of these patent disputes were resolved without compensation to the generic manufacturer or without restrictions on generic competition.

(The staff contact is Bradley S. Albert, Bureau of Competition, 202-326-3670)

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{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.