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FTC, lawmakers eyeing 'pay-for-delay'

WASHINGTON — Federal Trade Commission (FTC) chairman Jon Leibowitz and key members of Congress have renewed their call for legislation that would put an end to anticompetitive patent settlements. According to the FTC, drug manufacturers have been using to keep less-expensive medicines off the market and charge consumers billions of dollars a year in higher drug prices.

Speaking at a joint press conference, Leibowitz said consumers are forced to pay inflated prices or forgo their medication because of these “pay-for-delay” deals, in which brand-name drug makers pay their generic competitors to keep cheaper alternatives off the market. He urged Congress to adopt a provision as part of the health care reform bill to stop pay-for-delay agreements.

Leibowitz also announced that the FTC staff has issued a new study, titled “Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions,” that summarizes the savings lost to U.S. consumers during the past six years through such pay-for-delay deals in the drug industry, and found that the number of agreements with payment and delay has increased from zero in 2004 to a record 19 agreements in fiscal year 2009.

According to the study, which can be found on the FTC’s web site, www.ftc.gov, the cost to consumers from pay-for-delay deals is an estimated $3.5 billion per year, or $35 billion over 10 years. The study also found that settlement deals featuring payments by branded drug firms to a generic competitor kept generics off the market for an average of 17 months longer than agreements that do not include a payment. Most of the agreements reached since 2005 are still in effect, according to the study, and they currently protect at least $20 billion in sales of brand-name drugs from generic competition.

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