FTC report says pharma companies engaged in record 40 pay-to-delay deals

The Federal Trade Commission is not at all pleased with pharmaceutical companies, branded and generic alike.

The FTC's basic mission is to stop companies from hurting consumers by unlawfully restraining trade among theoretically competing companies in a particular market.

Pay-to-delay deals in the pharmaceutical industry are ones the FTC does not like and it hopes the Supreme Court will eventually agree.

But the FTC released a report Thursday that said a record 40 deals were completed in 2012, covering 31 different products. Those products had U.S. sales of $8.3 billion, according to the report.

Basically, those deals involve a generic company agreeing not to bring its version of a drug to market in exchange for cash from a branded company, which figures the payoff is less than the revenue it can generate from six more months of market exclusivity. That arrangement means higher drug prices for consumers, companies with employee drug plans, private insurance companies and taxpayers, who foot the bill for Medicare, Medicaid and other governmental insurance programs.

A "Paragraph IV" lawsuit, named after part a slice of the FDA rule book, is usually involved. The lawsuits question the patents of the original drug. But first, generic companies will have already filed an application with the FDA seeking approval of their drug. Being first to file gives that generic company a 180-day period of exclusivity among generic manufacturers. After the 180 days, any other drugmaker that gets approval of its copy of the original can sell the drug.

The 40 deals were a big jump from the 28 in the prior fiscal year and the most since the commission started keeping score in 2003.

“Sadly, this year’s report makes it clear that the problem of pay-for-delay is getting worse, not better,” FTC Chairman Jon Leibowitz said in a statement. “More and more brand and generic drug companies are engaging in these sweetheart deals, and consumers continue to pay the price. Until this issue is resolved, we will all suffer the consequences of delayed generic entry – higher prices for consumers, businesses, and the U.S. taxpayer.”

The Generic Pharmaceutical Association, the trade group for generic companies, disagreed.

"The FTC is wrong on the facts, wrong on the public policy and wrong on the law," Ralph G. Neas, president and CEO of GPhA, said in a statement. "If successful, the FTC position would dramatically undermine the law of the land and cost patients and consumers billions of dollars every year.”

The FTC press release is here and the full report is here.

The GPhA's full statement is here.