Healthy Skepticism Library item: 15537
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Bartz D.
FTC focused on drug 'pay for delay' settlements
Reuters 2009 Apr 27
http://uk.reuters.com/article/electionsNews/idUKTRE53Q5QF20090427
Full text:
Regulators determined to stop drug companies from paying off generic rivals believe they now have a good chance of convincing the Supreme Court to weigh in, Federal Trade Commission Chairman Jon Leibowitz said at the Reuters Global Financial Regulation Summit on Monday.
The FTC, while watching legislative efforts to ban the practice of big drug companies paying off generics as part of patent lawsuits, has challenged the deals in court with mixed success.
In 2006 it failed to convince the Supreme Court to hear its case against Schering-Plough Corp (SGP.N) for a deal with Upsher-Smith because of opposition from the Justice Department. But that has likely changed because of Christine Varney’s confirmation to head the department’s antitrust division.
“Christine Varney … is very much in sync with the FTC’s position,” said Leibowitz. “We are trying to get a case to the Supreme Court.”
Leibowitz, who has made opposing the deals a priority, said some drug company executives consider the deals distasteful but seek them out because they make business sense.
“We have a bunch of investigations in the pipeline,” he said. “We feel pretty happy that we’re on the right side.”
Senator Herb Kohl, a Democrat, and Senator Chuck Grassley, a Republican, have sponsored a bill in the Senate to ban the practice. Representative Bobby Rush, a Democrat, has sponsored similar legislation in the U.S. House of Representatives. President Barack Obama supports a ban.
Leibowitz sounded skeptical that antitrust law could be used to stop pharmaceutical mergers that would create companies “too big to fail.” Pfizer Inc (PFE.N) plans to merge with Wyeth (WYE.N), while Merck & Co Inc (MERK.BO) has said it will acquire Schering-Plough.
“It’s hard to fit ‘too big to fail’ into antitrust doctrine. But as a policy matter, it’s a legitimate issue,” the FTC chief said, adding, “I totally understand why people are upset. … You don’t want to create companies that are too big to fail.”
The FTC filed suit against Cephalon Inc (CEPH.O) in 2008, accusing it of paying $200 million to four generic drug makers to delay production of a version of the Cephalon sleep disorder drug Provigil. Cephalon has said it did nothing wrong.
The FTC filed suit in February against Solvay SA (SOLB.BR), which struck deals in 2006 with generic drug companies Watson Pharmaceuticals Inc (WPI.N), Par Pharmaceuticals (PRX.N) and Paddock Laboratories to delay their production of a cheaper version of Solvay’s testosterone-replacement therapy AndroGel.
The first known “pay for delay” was in 1994 when Bristol-Myers Squibb Co (BMY.N) paid $290 million to Schein Pharmaceutical to delay the sale of a generic version of the Bristol-Myers anxiety drug Buspar.
