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More firms settling with generics producers

FTC claims that agreements to restrict or delay generic competition are anticompetitive

Pharma firms are cutting more and more deals with generics firms to slow down the introduction of cheaper versions of their drugs at the expense of the consumer, according to the US Federal Trade Commission (FTC).

Such agreements involve brand name manufacturers of drugs coming off-patent paying compensation to generics makers which promise to restrict or delay selling competing generic drugs.

ìWe are seeing far more settlements today that potentially raise competition concerns,î said FTC Commissioner Jon Leibowitz on the same day that his body's competition bureau issued a report on patent settlements filed in the fiscal year 2005.

A federal appeals court ruling last year overturned an FTC decision that said Schering-Plough had acted illegally to keep generic versions of its high blood pressure drug, K-Dur, off the market through patent settlements with Upsher-Smith Laboratories, a generic competitor.

A second appeal court decision upheld a lower court decision that threw out a similar case involving AstraZeneca's Tamoxifen.

The FTC has petitioned the US Supreme Court to overturn the Schering-Plough decision.

Leibowitz said that if the appeals court decisions remain in place, pharma firms will have ìcarte blanche to avoid competition and share resulting profitsî.

ìUntil recently, payments by brand-name companies to generics were the exception, but now they're the rule,î he added. ìThey appear to be a new way to do business, and that's very troubling. Hopefully the Supreme Court will take our case and reverse [their decision].î

In the competition bureau report, the FTC found that in the last fiscal year, three of 16 drug patent settlements included payments to the generic manufacturer and restrictions on when it would become available, the first time since 1999 that pharma firms had entered into such agreements.

However, in the last six months the FTC said at least seven of the 10 settlements reported to the agency included restriction of sale provisions. Leibowitz cited recent settlements involving Bristol-Myers Squibb and sanofi-aventis' blood thinner, Plavix, and Provigil, a sleep disorder drug made by Cephalon.

30th September 2008

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