Thursday, July 1, 2010

Drug makers and generic manufacturers colluding to inflate drug prices, says Federal Trade Commission

According to an article in this week's Bloomberg Businessweek (June 28 - July 4, 2010, pp. 20-21), the Federal Trade Commission (FTC) is taking action against name-brand and generic drug manufacturers for a practice that it says violates federal antitrust laws and ultimately increases the cost of medication to consumers.

Under US law, a patent is valid for 20 years from the first filing.  A patent can be challenged, however, on a number of grounds, and if struck down, the invention can sometimes become public domain before the expiration of the 20-year term.

According to the FTC, it has become a common practice for generic drug manufacturers to file challenges to name-brand patents.  Rather than argue their cases in court, however, the generic and name-brand manufacturer often enter into an agreement whereby the name-brand manufacturer pays the generic company to drop its claims, often in the form of a yearly payment each year for the life of the patent.

In one example cited by Businenessweek, Barr Pharmaceuticals filed a challenge to the patent of Bayer's product Cipro, an antibiotic effective against anthrax.  Barr dropped its claim after Bayer agreed to pay the company $398 million over six years.  The agreement was approved by the Second Circuit Court of Appeals, a federal court in New York, but that approval is now being reviewed at the insistence of the FTC.

FTC chairman Jon Leibowitz says this practice, which he calls a "pay-to-delay" scheme, results in increased drug prices costing consumers as much as $3.5 billion per year.

No comments:

Post a Comment