Healthy Skepticism Library item: 18443

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Publication type: news

Kirchgaessner S
Watchdog given rebuke on drugs pacts probe
The Finanical Times 2010 July 19
http://www.ft.com/cms/s/0/012a199c-92c4-11df-9142-00144feab49a.html?ftcamp=rss

Full text:

Jon Leibowitz, the Federal Trade Commission’s chairman, relishes his role as a thorn in the side of the pharmaceutical industry.

Mr Leibowitz has used his power at the competition watchdog to crusade against deals between big branded drugmakers and their gen eric counterparts that he argues are anti-competitive and delay the introduction of cheap drugs to the market. He has called these “pay for delay” deals the most corrupt practice in the healthcare industry.

But a recent court finding shows that Mr Leibowitz and the FTC may have crossed the line in its investigation of a settlement between a drugmaker called Cephalon and a generic drugmaker called Watson over a drug called Provigil, Cephalon’s blockbuster sleep disorder medication.

In a rare rebuke of the FTC issued last week, a federal magistrate judge said evidence showed a “strong possibility” that the regulatory agency improperly used its power to press Watson. Specifically, it said there was evidence that the FTC may have shared confidential information with Watson’s competitor and that the FTC may have initiated an investigation to “harass” the company.

In a rare move, the judge said Watson could submit questions to the FTC to learn more about the agency’s actions.

The FTC, which denies wrongdoing, had demanded that Watson’s chief executive, Paul Bisaro, testify on his company’s dealings with Cephalon. Mr Bisaro has resisted the subpoena.

Richard Feinstein, the FTC’s competition director, said in an interview with the Financial Times on Sunday that the commission would comply with the order and was eager to share its side of the story.

“We think it is important that people don’t conflate something we view as a sideshow that has been ginned up by Watson with the underlying policy questions that are far more important,” he told the FT.

The preliminary finding raises questions of the FTC at a sensitive time. Mr Leibowitz has lobbied members of Congress to pass legislation that ban “pay for delay” agreements. Though he has faced tough opposition from the drugs lobby, he has gained growing support among lawmakers on Capitol Hill. A measure to outlaw such agreements was tacked on to unrelated must-pass legislation to fund the wars in Afghanistan and Iraq and could be approved in coming weeks.

If he succeeds, Mr Leibowitz will have ended a complex legal practice widespread in the drugs industry. In a typical “pay for delay” deal, a generic drugmaker is paid by a branded drugmaker to settle a patent challenge, usually involving a blockbuster drug. Drugs companies say such arrangements are good for consumers because they include terms that give generic drugmakers early access to the market. The FTC claims the cheaper drugs could come to market even sooner if the deals were outlawed.