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Pharma’s Pay-to-Delay Deals Targeted Again

Five months after the US Supreme Court ruled that drug makers can be subject to antitrust scrutiny for their so-called pay-to-delay deals, a Democratic congressman has introduced legislation that would declare these agreements to be unlawful, although the language differs from a Senate bill that assumes a deal is illegal if challenged by the US Federal Trade Commission.

The Supreme Court, you may recall, decided drug makers can face lawsuits over pay-to-delay patent settlements, although such deals should not necessarily be assumed to be illegal. Also known as reverse settlements, these typically involve a brand-name drug maker paying a settlement to a generic rival in exchange for ending patent litigation and launching a copycat medicine at a future date (ruling explained in earlier Pharma news).

PFE Revenue (TTM) Chart

PFE Revenue (TTM) data by YCharts

(YCharts note: Some major pharma companies – including Pfizer (PFE), Merck (MRK), GlaxoSmithKline (GSK) and Sanofi (SNY) have suffered outright revenue declines in recent years, as patents expire on former blockbuster drugs and company labs fail to develop enough new medicines. Pay-to-delay deals are one of the many steps drug makers have taken to try to hold onto sales.)

The pharmaceutical industry has argued these settlements actually speed lower-cost generics to pharmacy shelves and medicine cabinets, and warned that outlawing the deals could drastically alter the strategic decisions behind the introduction of many generic drugs. This, in turn, would raise costs to consumers.

But the Supreme Court largely vindicated the FTC position that the deals are anti-competitive because generic drugmakers are given incentive to file lawsuits against brand-name rivals and then settle for a quick profit, rather than challenge a patent in court. The FTC maintains these deals cost US consumers about $3.5 billion annually.

To read the remainder of this article, go to Pharmalot.

Ed Silverman, a contributing editor of YCharts, is the founder and editor of Pharmalot. He previously reported on the pharmaceutical industry and other business topics for the Star-Ledger of New Jersey, New York Newsday and Investor’s Business Daily. He can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

Read more articles about: Company News  pharma stocks   

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