May 23, 2008 / 7:38 PM / 11 years ago

U.S. FTC reports 14 deals to delay generics in '07

WASHINGTON, May 23 (Reuters) - Brand name pharmaceutical companies struck 14 deals that led to delayed sale of cheaper generic drugs in the 2007 fiscal year, the U.S. Federal Trade Commission said.

The FTC considers the controversial deals a violation of antitrust law but the courts have split on whether they are legal. Sen. Barack Obama, the Illinois Democrat running for president, is among 10 sponsors of Senate legislation to bar them.

In a report released on Wednesday, the FTC did not name the drugs affected by deals during the 2007 fiscal year, which ended on Sept. 30.

Of the 33 agreements made by brand name companies and generics in 2007, 14 resolved patent litigation on over 13 brand name drugs, the report said.

In the 14 deals, the generic companies received some sort of compensation in order to delay production of a generic version of a drug, which can be 90 percent cheaper than the brand name version.

In 11 cases, the big drug company pledged not to produce its own generic drug once a patent expired, and in three cases there was a side deal on an unrelated issue which benefited the generic.

FTC Commissioner Jon Leibowitz, commenting on the report, said: “What it shows is that this problem is persistent. It’s becoming the new way to do business. It means that consumers in need of affordable drugs are going to get generics later, not sooner.”

Neither the Senate bill to ban the deals nor its companion in the U.S. House of Representatives has made much headway because of opposition from pharmaceutical companies and makers of generic medicines.

Michael Ortiz, one of Sen. Obama’s staffers, said that Obama continued to oppose “reverse payments,” as the practice is known by its opponents.

“As a member of the Senate Health, Education, Labor, and Pensions Committee, Senator Obama is committed to working to ensure Americans have access to affordable medicine,” Ortiz said in an e-mail.

The FTC has fought the deals. It filed suit against Cephalon CEPH.O in February, accusing it of paying $200 million to four generic drug makers to delay production of its sleep disorder drug Provigil. Cephalon has said it did nothing wrong.

The FTC is also investigating possible agreements made to delay marketing of Solvay’s (SOLB.BR) testosterone cream AndroGel, Shire’s SHP.L attention deficit drug Adderall XR and King Pharmaceutical’s KG.N high blood pressure medication Altace.

The reverse payment deals sprang up following passage of the 1984 Hatch-Waxman Act, which was designed to speed generic drugs to market.

Canadian generic company Apotex Corp is alone among the drug companies in publicly opposing the settlements.

It has been lobbying Congress to change the law so that if one settlement blocks a generic entry, a second generic company can step up and try to enter the market.

“Obviously the law is not working the way Congress intended it to,” said Steve Giuli, Apotex’s director of government affairs. “Instead of facilitating competition, it is blocking it.” (Reporting by Diane Bartz; Editing by Tim Dobbyn)

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