Barr CEO to testify on patent issues

Barr CEO to testify on patent issues

	Published : Wed, 17 Jan 2007 16:04 By : Agencies Print this Story

WASHINGTON (AFX) - The head of one of the world's largest generic drug companies is expected Wednesday to defend before Congress the practice of accepting payments from brand name rivals to settle patent litigation.

Generic drug companies often challenge in court the patents of established drugs in order to bring competing generic versions to market. Increasingly, they have agreed to settle these cases in exchange for financial payments.

Barr Pharmaceutical Inc.'s Chief Executive Bruce Downey is scheduled to testify before Congress on the question of whether these settlement payments discourage competition between generic and conventional drug companies. Federal regulators and members of Congress have charged that the settlement agreements are a way for pharmaceutical companies to reward generic firms for keeping cheaper drugs off the market.

Barr Pharmaceuticals spokesperson Carol Cox said Tuesday that patent settlements are consumer-friendly because they resolve legal gridlock that would otherwise stall the launch of generic drugs indefinitely.

But settlements that include payments can also be a major source of revenue for generic companies. Last year Bristol-Myers Squibb Co. and Sanofi Aventis SA agreed to pay $40 million to Apotex Inc. to drop litigation that would have brought a generic version of the blood thinner Plavix to the market. State authorities ultimately rejected the deal, though similar agreements are often successful.

Generic drugs are seen as a key vehicle for controlling health care costs since they usually sell for 30 to 80 percent less than the original drug. Industry leaders besides Barr include Teva Pharmaceuticals Industries Ltd. and Mylan Laboratories Inc.

In addition to Downey, the Senate Appropriations committee is scheduled to hear from representatives from the Federal Trade Commission and the Pharmaceutical Research and Manufacturers of America, the lobbying group for the brand-name drug industry.

Senator Herb Kohl is expected to reintroduce a bill that would make the payments at issue illegal. While the legislation received bipartisan support last year, it never received a vote on the Senate floor.

Lehman Brothers analyst Tony Clapsis wrote in a research note last month that the issue of patent settlement is 'certain to get considerable attention next year,' though said a bill to bar payments has less than 25 percent chance of passing Congress.