Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
January 17, 2013 12:00 AM

Drugmakers' settlements cost consumers: FTC

Joe Carlson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Generic drugs are supposed to compete with branded pharmaceuticals to drive down prices, but a report from the Federal Trade Commission (PDF) says a spike in legal settlements among drugmakers in 2012 stifled competition and cost Americans an extra $3.5 billion.

    The finding comes as the U.S. Supreme Court prepares to hear oral arguments in a “pay for delay” case, FTC v. Watson Pharmaceuticals, in which the government agency says several drugmakers drove up consumer prices for topical testosterone treatments by settling patent challenges for cash payments instead of fighting in court.

    The FTC Bureau of Competition on Thursday released its ninth annual report looking at pay-for-delay settlements across the entire drug industry, finding that a record 40 settlements were struck last year between makers of branded and generic drugs. In each of the 40 cases, the makers of generic drugs agreed to drop legal challenges to patents and not launch competing products in exchange for cash payments.

    “More and more brand and generic drug companies are engaging in these sweetheart deals, and consumers continue to pay the price,” FTC Chairman Jon Leibowitz said in a news release.

    Prices for generic drugs are typically 85% lower than the equivalent brand name pharmaceuticals, the FTC says.

    Richard Manning, a partner at consulting firm Bates White who formerly worked at Pfizer and Merck & Co., said the higher prices charged for brand-name drugs serve a valid purpose: encouraging investments in new innovations, which benefits consumers through the development of cutting-edge therapies.

    As with all patent law, the trick is balancing legitimate profit-seeking incentives for innovators against the benefit to consumers of lower long-term prices, he said.

    With brand-name drugs the equation is complicated by the fact that many of the high-profit years of a 20-year patent are used up during the government approval process, and a typical brand-name drug patent may be good only for 10 to 12 years of sales. That period can shrink further if a generic maker successfully overturns a patent before it expires, stifling the future incentive to create new drugs.

    Manning said legal conclusions about whether makers of generics should be allowed to settle out of court in exchange for agreements not to compete should turn on the likelihood of a patent withstanding a challenge. The more likely a patent is to be overturned by a court, the more questions be prompted by decisions to settle such cases, he said.

    The Supreme Court will have a chance later this year to bring clarity to the issue following its oral arguments in FTC v. Watson on March 25.

    The FTC has been waging a legal battle against a subsidiary of Abbott Laboratories, Solvay Pharmaceuticals, which agreed to pay $42 million to several companies in exchange for agreements to drop legal challenges to Abbott's patent on AndroGel until 2015.

    In 2006, Solvay estimated it would lost 90% of its sales of AndroGel within a year of generics hitting the market, cutting annual profits by $125 million, court filings in the case say.

    Although the companies—including generics-makers Watson, Paddock Laboratories, and Par Pharmaceuticals—maintain their decisions were legal, they did not oppose FTC's request to have the Supreme Court consider the challenge because they said differing interpretations of federal law had led to split legal reasoning in U.S. circuits.

    “I think it will be good to get clarity on what kinds of settlements are acceptable and which are not, but I think it would be unfortunate if all such settlements are ruled out,” Manning said of the future Supreme Court decision on the matter.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    GenesisCare files for Chapter 11 bankruptcy, seeks to offload U.S. operations
    GenesisCare files for Chapter 11 bankruptcy, seeks to offload U.S. operations
    bankruptcy 2
    Friday Health Plans shutting down amid financial shortfall
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing