FTC scrutinizes drug patent settlements

FTC scrutinizes drug patent settlements

	Published : Thu, 18 Jan 2007 07:23 By : Agencies Print this Story

WASHINGTON (AFX) - Federal regulators on Wednesday said more generic drug makers than ever before are accepting compensation from manufacturers of brand-name pharmaceuticals to end patent disputes.

Generic drug companies routinely challenge the patents of established drugs in order to win the right to market cheaper versions. Market leaders include Barr Pharmaceuticals Inc., Teva Pharmaceuticals Industries Ltd. and Mylan Laboratories Inc.

A report released Wednesday by the Federal Trade Commission shows an increasing number of generic drug makers are choosing to settle such cases in return for beneficial arrangements with their brand rivals.

Half of all such patent settlements in fiscal year 2006 involved compensation to a generic drug company who then agreed to delay launching a cheaper version of an established drug, according to the government report. Just two years ago, the FTC said, no patent settlements involved both provisions.

In some cases, generic drug companies received direct financial payment for agreeing to settle. But in many other cases the brand drug manufacturers awarded beneficial licensing and marketing agreements to the generic firm. For instance, in three cases last year a maker of brand-name drugs agreed not to launch its own generic version of the drug in dispute, which could cut into the generic firm's profits. In other cases generic firms received payments to co-promote products made by the brand-name company.

The government watchdog notes that the recent uptick in patent settlements comes after FTC's highly publicized loss in court to Schering-Plough Corp., during March 2005. In that case, the Federal Court of Appeals for the 11th Circuit in Atlanta reversed FTC's decision that two settlements made by Schering violated antitrust laws.

FTC has come out strongly against such agreements and has advocated legislation that would make them illegal.

Representatives for the agency as well as the generic and brand drug industries testified before the Senate Judiciary Committee Wednesday on the patent settlement issue.