US Federal Trade Commission clamps down on pharma ‘pay to delay’ deals
pharmafile | January 14, 2016 | News story | Manufacturing and Production, Sales and Marketing | Pay to delay, US Supreme Court, antitrust laws, federal trade commission, generic competition, generics, patents, pay for delay
Pharma companies were able to negotiate far fewer so-called ‘pay to delay’ cases as a strategy to stave off generic competition for their branded drugs, after the effects of a US Supreme Court ruling began to hit the industry hard.
The practice has become more popular in an increasingly litigious pharma industry. The deals see a pharma company that sells a branded drug paying a generic firm money, or striking some other financial arrangement, in exchange for the generic firm’s agreement to delay bringing out a cheaper version of the medicine.
High-profile cases have involved AstraZeneca and Ranbaxy in a deal over Nexium (esomeprazole), and Lundbeck and Merck in Europe. In both cases, heavy fines were levied by the US Supreme Court and the European Commission. The fines are often substantial; earlier this year Teva was fined a record $512 million in a case about generic Provigil (modafinil), and Servier was fined €331 million by the European Commission in 2014, for delaying bringing generic versions of the blood pressure drug perindopril to market.
In the US, the Supreme Court ruled in June 2013 that the deals could potentially be a violation of antitrust law, but refused a request by the Federal Trade Commission (FTC) to declare them to be presumed to be illegal.
Since then, the FTC says that pharma companies reached 21 pay for delay deals in the financial year in 2014, compared with 29 in 2013 and a record 40 in 2012. The 2014 agreements involved 20 different branded drugs with combined US sales of about $6.2 billion, the FTC revealed.
Ten involved a cash payment, six involved compensation via a related business arrangement and five involved an agreement by the branded manufacturer to refrain from marketing a competing generic for a certain period of time, the FTC said. There are still potentially three deals to be struck in the financial year 2015, it added.
However the FTC said it was pleased with the drop in the number of the deals. “Although it is too soon to know if these are lasting trends, it is encouraging to see a significant decline in the number of reverse payment settlements,” Debbie Feinstein, director of the FTC’s bureau of competition, told Reuters.
Lilian Anekwe
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