FTC: "Pay-for-delay" to generic manufacturers is anticompetitive

The Federal Trade Commission (FTC) is arguing that when brand-name drug manufacturers pay generic drug makers to sit on the sidelines for a certain period of time before entering the generic marketplace, the action is anticompetitive.

The FTC filed an amicus curiae brief on the issue in the U.S. District Court for the District of New Jersey, as part of an antitrust lawsuit between Wyeth and Teva Pharmaceuticals. In the complaint, Wyeth alleges that Teva agreed to delay its introduction of a generic version of Wyeth’s antidepressant medication, Effexor XR.

“This empirical evidence confirms what the pharmaceutical industry has long understood: that a no-AG (authorized generic) commitment provides a convenient method for branded drug firms to pay generic patent challengers for agreeing to delay entry,” the FTC wrote in the brief.

This is a case in which consumers will likely lose, regardless of the outcome, according to Ned Milenkovich, PharmD, JD, chair of the Pharmacy Practice for the law firm McDonald Hopkins LLC. “If manufacturers prevail, then the consumer would have a barrier to generic drug access to some degree if a brand-name manufacturer is able to pay off the generic makers to sit on the sidelines,” Milenkovich said. “If the FTC position is espoused, then brand-generic patent infringement litigation will have less certain outcomes, which could disincentivize generic makers from entering the marketplace due to the protracted litigation and legal fees involved with an uncertain outcome. This then could potentially drive up the price of drugs for consumers.”

According to the FTC, the Third Circuit Court of Appeals also recently ruled that payments by a branded drug manufacturer to a potential generic competitor is evidence of an “unreasonable restraint of trade,” when they are part of patent settlements that delay the introduction of a generic competitor. “The FTC has, for years, opposed anticompetitive, pay-for-delay patent litigation settlements,” the FTC said in a statement.