The Federal Trade Commission has a powerful new ally in its quest to quash "pay to delay" patent settlements: The American Medical Association. As Forbes reports, the doctors' association now officially supports legislation to outlaw the practice.
For years, branded drugmakers have resolved patent litigation with cash settlements. Generics makers take the cash and agree to a particular launch date for the targeted drug. Drugmakers say these deals aren't anti-competitive; after all, most of the time the agreed-upon launch is on or before the patent expiration date, they say.
But critics of the practice--including some litigious payers and pharmacies--say the deals actually do delay the advent of copycat meds. If the patent suits were allowed to proceed, generics makers might just win, bringing their versions to market posthaste. Some high-profile court battles are now underway over Pfizer ($PFE) and Ranbaxy Laboratories' patent settlement on Lipitor, for example.
Now the AMA has chimed in, by pronouncing that Pfizer made $10.7 billion from Lipitor in one year, thanks to its patent deal with Ranbaxy, Forbes points out. And that sort of boon for Big Pharma contributes to the increase in healthcare costs, the group says. In fact, the Congressional Budget Office figures the U.S. government could save $4.8 billion over 10 years by nixing pay to delay.
So far, however, pharma has helped fight off legislation that would bar pay-to-delay deals. And the FTC's crusading chairman Jon Leibowitz has been less-than-successful at challenging the deals in court--and persuading Congress to take his part. With the AMA behind a pay-to-delay ban, at a time when politicians are looking for ways to cut healthcare costs, the balance could shift. If the Supreme Court doesn't get there first, that is.
- read the Forbes story