FTC: Pay-for-delay ban would save $2.67B

It's no coincidence that the Federal Trade Commission released new "pay for delay" numbers yesterday, just as the Congressional budget-cutting committee nears its deadline. The FTC wanted to strengthen its case for a ban on certain patent settlements between branded drugmakers and the generics companies seeking to copy their products.

The FTC's report found that drugmakers struck 28 "potential" pay-for-delay deals during the fiscal year ended Sept. 30. That's slightly fewer than the record-setting 31 deals arranged last year. Echoing his usual refrain, Chairman Jon Leibowitz said that pay-for-delay settlements increase drug costs for consumers and the government--and added the following: "Fortunately, Congress has the opportunity to fix this problem through the Joint Select Committee on Deficit Reducation--and save the government and American taxpayers billions of dollars."

In the past, FTC has estimated that pay-for-delay deals cost taxpayers $3.5 billion annually. Leibowitz didn't offer updated numbers this time, but the agency said the latest patent settlements involved 25 branded drugs with combined sales of more than $9 billion a year. And the agency said that a pay-for-delay ban would cut the deficit by $2.67 billion over 10 years.

It's just the latest in FTC's ongoing crusade against the patent settlements it finds questionable. Specifically, FTC objects to patent settlements that involve a payment--in cash or marketing rights--from a branded drugmaker to a generics firm. Those deals keep generics off the market for an average of 17 months longer than settlements that don't involve some form of payment. The agency isn't alone in looking askance at patent deals; European antitust reguators have been raiding pharma offices in an ongoing probe of similar settlements.

Obviously, branded drugmakers don't agree with the FTC's stance. Pharma companies have said that their settlements typically allow generic versions onto the market before patents expire. Vigorous lobbying by branded drugmakers and the generics industry has helped quash previous proposals for a pay-for-delay ban, The New York Times points out. We'll see how the effort fares this time.

- see the FTC release
- get more from the NYT