Feds keep watch on 'pay-for-delay' marketing deals

June 1, 2006

Washington, D.C.-The Federal Trade Commission is concernedthat pharmaceutical companies increasingly are paying makers ofgeneric medications to delay marketing competitive products. FTCCommissioner Jon Leibowitz criticized "reverse payment"settlements, which involve compensation from a branded manufacturerlinked to restrictions on the marketing by a generic product'smanufacturer until closer to the expiration of an innovator'spatent.

WASHINGTON, D.C.-The Federal Trade Commission is concerned that pharmaceutical companies increasingly are paying makers of generic medications to delay marketing competitive products. FTC Commissioner Jon Leibowitz criticized "reverse payment" settlements, which involve compensation from a branded manufacturer linked to restrictions on the marketing by a generic product's manufacturer until closer to the expiration of an innovator's patent.

One case involving efforts to delay competition to the blockbuster drug Plavix has spurred retailers, labor unions and insurers to file lawsuits blocking a planned patent settlement. Bristol-Myers Squibb and Sanofi-Aventis announced earlier they had negotiated an arrangement with generics maker Apotex to halt efforts to compete with the blood-thinning drug until patents expire in 2011. The FTC is monitoring the Plavix case, as well as other "pay-for-delay" agreements negotiated since October 2005.

In April, the Pharmaceutical Care Management Assn. reported that Medicare Part D could save at least $23 billion over the next five years as 14 major brand-name drugs lose patent protection and gain generic competition. This may prompt Congress to encourage more generic drug prescribing to keep drug costs down for Medicare and Medicaid programs and private insurers.