More scru­tiny for drug set­tle­ments

Modern Healthcare - - OPINIONS / EDITORIALS -

“The Fed­eral Trade Com­mis­sion has been bat­tling for years to end a de­vi­ous tac­tic used by some drug com­pa­nies to pay com­peti­tors to de­lay putting cheaper generic ver­sions of their brand-name drugs on the mar­ket. The tac­tic, known as pay-for-de­lay, re­sults in higher costs for con­sumers.

The U.S. Supreme Court, in a 5-to-3 de­ci­sion, gave the com­mis­sion a par­tial vic­tory that will al­low it to bring an­titrust charges against pay-for-de­lay prac­tices that lower courts had deemed le­gal, pro­vided the deal did not keep a generic off the mar­ket be­yond the patent life of the brand-name drug. The com­mis­sion es­ti­mates that such agree­ments cost Amer­i­cans $3.5 bil­lion a year in higher drug prices. In Fed­eral Trade Com­mis­sion v. Ac­tavis, Solvay Phar­ma­ceu­ti­cals ob­tained a patent in 2003 for a testos­terone gel only to have Ac­tavis, a generic maker, ap­ply for ap­proval of a copy­cat ver­sion on grounds that the patent was in­valid and its prod­uct did not in­fringe it. Solvay sued Ac­tavis, and the two set­tled the case in 2006. Ac­tavis agreed not to bring its drug to mar­ket for nine years, which was still more than five years be­fore Solvay’s patent was due to ex­pire. Solvay agreed to pay Ac­tavis an es­ti­mated $19 mil­lion to $30 mil­lion an­nu­ally dur­ing that pe­riod.

The court said such agree­ments could have anti-com­pet­i­tive ef­fects—and be sub­ject to an­titrust scru­tiny—even though they in­volve drugs still un­der patent. The FTC had asked the court to hold such set­tle­ments “pre­sump­tively un­law­ful,” but the jus­tices re­fused to go that far. In­stead, they said the agency must prove its case against any set­tle­ment, based on fac­tors like the size of the pay­ments and whether there was any other ex­pla­na­tion for them. Still, by al­low­ing le­gal chal­lenges, the court gives the agency power to en­sure more mar­ket com­pe­ti­tion.”

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