MARCH 01, 2007

Researchers for the Federal Trade Commission's (FTC) Bureau of Competition are reporting a sharp upsurge in settlements of drug patent disputes between generic and branded pharmaceutical companies, a trend that could have major implications for the availability of less costly generic medicines in the future.

The FTC study identified 28 final settlements involving drug patents during fiscal year 2006, and in half of them the branded manufacturer paid some form of compensation that delayed the introduction of a generic product. In contrast, the FTC said that during the previous year only 3 drug-industry settlements included provisions under which the generic introduction was delayed after compensation was paid by the branded company.

According to the FTC, the compensation to the generic firms took different forms, including: (1) payments for copromoting the brand product; (2) payments for supplying, or being available to supply, the brand with raw material or finished drug product; (3) an agreement by the brand not to compete with an authorized generic; (4) payments for intellectual property to the brand; and (5) payments as part of a codevelopment project between the brand and the generic.

The federal researchers also found settlements that restricted the generic company from marketing products that were not the subject of the litigation. "This restriction appeared in 5 of the settlements, and in all them the generic received compensation," the FTC said.