FTC chief laments 63% boost in generic settlements

You can't accuse Federal Trade Commission Chairman Jon Leibowitz of being a quitter. The agency chief is on his generic settlements soapbox again, saying that the number of deals delaying copycat drugs increased by 63 percent last year. Calling the deals "outrageous," Leibowitz told Bloomberg in an interview, "Either the courts or Congress needs to stop them."

The number of patent settlements that delayed the launch of generic drugs grew to 31 in 2010, up from 19 in 2009. The patent deals involved 22 products that account for $9.3 billion in sales, the agency said.

The patent settlements--dubbed "pay-for-delay" deals--have grown increasingly controversial as more blockbuster drugs near the end of their patents. Antitrust officials in the U.S. and Europe have been investigating the settlements, and lawmakers in the U.S. have introduced legislation to bar them.

But drugmakers--both branded and generic--see the deals as essential to the process of getting cheaper copycats onto the market. Without them the cost of patent litigation would be much higher--and those costs could deter generics makers from challenging patents in the first place, the companies say. "Without settlements, these generics may not be available to patients for years," a PhRMA spokeswoman told Bloomberg.

The FTC has fought the settlements in court with little success. It has also backed legislation that would specifically prohibit pay-for-delay deals. Three bills have died in Congress over the past several sessions, but a new one was introduced in late January, backed by Sens. Herb Kohl and Chuck Grassley. President Obama's 2012 budget would give FTC more power against pay-for-delay deals.

But as legal experts recently told Corporate Counsel, these efforts may be moot, considering the Republicans' control of the house. "Never say never," George Gordon, a partner with Dechert who has helped numerous drugmakers devise reverse payment deals, "but I think they're tilting at windmills."

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