Pharma Pay-To-Delay: $Billions Still At Stake

Two months after the US Supreme Court ruled that drugmakers can be subject to antitrust scrutiny for their so-called pay-to-delay deals, the US Federal Trade Commission has asked a federal judge to accept its friend-of-the-court brief in which the agency charges that a patent settlement between Pfizer (PFE) unit Wyeth and Teva Pharmaceuticals (TEVA) was problematic, even though a cash payment was not involved.

The Supreme Court, you may recall, decided that drugmakers 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 deals typically involve a brand-name drugmaker paying a settlement to a generic rival in exchange for ending patent litigation and launching a copycat medicine at a future date (covered in earlier Pharma news).

The FTC, which maintains these deals cost US consumers about $3.5 billion annually, objects to a deal in which Wyeth – now owned by Pfizer – agreed not to market an authorized generic version of its Effexor XR antidepressant and Teva Pharmaceuticals agreed to delay introduction of its generic until July 1, 2010. An authorized generic is identical to the brand-name drug and sold by a brand-name drugmaker.

Pfizer and other major pharma companies -- Merck (MRK), GlaxoSmithkline (GSK), Sanofi (SNY), AstraZeneca (AZN), Bristol-Myers Squibb (BMY) -- have suffered outright revenue declines of late as patents expire on their best-selling drugs. Pay-to-delay deals are one of many ways the companies have sought to extend the life of patent-expiring drugs.

PFE Revenue TTM Chart

PFE Revenue TTM data by YCharts

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 You can also request a demonstration of YCharts Platinum.



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