The Federal Trade Commission has released a report titled “Authorized Generic Drugs: Short-Term Effects and Long-Term Impact,” in which the agency concludes that “pay-for-delay” agreements between name-brand drug manufacturers and generic drug makers is “a practice that causes substantial consumer harm” by keeping drug prices high. Responses to the report were swift, with Democratic lawmakers calling for the agency and Congress “to halt these abusive practices.” Representative Henry Waxman (D-Calif.) said, “Brand-name drug companies use anticompetitive agreements to keep prices high and overcharge consumers,” while Senator Jay Rockefeller (D-W.Va.) noted, “This report proves what I have long suspected: that promotion of authorized generics can reduce the incentive for true generic companies to enter the market. That allows brand name companies to unfairly dominate the marketplace long after their patents have expired.”

The Generic Pharmaceutical Association (GPhA) countered that the report is misleading to consumers. According to Bob Billings, the association’s executive director, “By continuing to push its misguided policy to ban pro-consumer patent litigation settlements, the FTC is gambling with consumers’ savings.” Billings pointed to research conducted by RBC Capital Markets purportedly suggesting that “had a ban on patent litigation settlements been in place over the past 10 years, up to 100 of the approximately 280 first-time generics launched between 2000 through 2009 would have been delayed until the expiration of the brand patent.”  

Billings also said, “It’s the patent, not the patent settlements that holds up the launch of a generic drug. Patent settlements have never prevented competition beyond the patent expiry, and generally have resulted in making lower-cost generics available months and even years before patents have expired.” See GPhA Press Release and Zecco: Market News Story, August 31, 2011.