Less cash, more promises in pay-to-delay deals

The debate over pay-to-delay deals played out in microcosm at an American Bar Association panel yesterday. As Legal Times reports, the Federal Trade Commission's deputy assistant director Bradley Albert joined a Johnson & Johnson ($JNJ) in-house lawyer and an antitrust attorney on a panel that ultimately concluded pay-to-delay deals may have tapered off and grown more subtle, but they're still happening.

Albert quoted some familiar numbers recently generated by the FTC: 28 "potential" pay-to-delay settlements in fiscal 2011, down from 31 in 2010. But as panel moderator Eric Grannon, a White & Case partner, pointed out, the potential pay-to-delay deals in 2011 accounted for only 18% of patent settlements, whereas pay-to-delay arrangements made up half of the patent deals in 2006. Grannon said pay-to-delay agreements peaked that year, and he's seen "a significant drop-off" since, Legal Times reported.

J&J's Jerome Swindell noted one big change: Patent deals have moved away from big cash payments. Antitrust attorney Scott Perwin agreed, saying he's seen "an evolution of agreements from cash to more sophisticated transactions." Cash transactions are easier to challenge, he said.

The most common arrangement these days? Authorized generics. Branded drugmakers are promising not to introduce their own generic versions to compete with the challenger's first-to-file, exclusive copies, Albert said. Fifty-six of the 125 patent settlements the FTC has flagged involved that sort of promise, he said.

- read the Legal Times piece