FTC report IDs new twist on pay-to-delay

The Federal Trade Commission has found a new target in its quest to foster competition in the drug market: authorized generics. Some drugmakers are using promises to stay out of the authorized generics business to persuade copycat makers to delay their versions of branded meds, the agency says in a new report.

Until now, the FTC has been focusing on "pay-to-delay" deals, in which branded drugmakers use cash settlements to resolve patent disputes with generics firms, as the New York Times points out. The FTC claims the deals keep cheaper generics off the market, costing consumers $3.5 billion a year. Brand-name pharma says the settlements are perfectly legal business decisions.

The agency now says cash doesn't have to change hands for a patent-litigation settlement to amount to a pay-to-delay deal. When a brand-name drugmaker introduces an authorized generic during a first-to-market generics firm's 180-day exclusivity period, the two-way competition brings prices down 4% to 8%, the FTC found.

So, promising to hold off on an authorized generic version can be equivalent to a cash settlement. Instead of writing a check, the branded drugmaker says it won't enter the market and ding the generics company's sales. "Instead of saying, 'Here's $200 million, go away,' they're saying they could penalize them $200 million, but they wont', so go away," FTC chief Jon Leibowitz told the Times.

- read the NYT piece