GENERIC PATENT SETTLEMENTS RISE, FTC STUDY CONCLUDES

Researchers for the Federal Trade Commission's (FTC)Bureau of Competition are reporting a sharp upsurge insettlements of drug patent disputes between generic andbranded pharmaceutical companies, a trend that couldhave major implications for the availability of less costlygeneric medicines in the future.

The FTC study identified 28 final settlements involvingdrug patents during fiscal year 2006, and in half of themthe branded manufacturer paid some form of compensationthat delayed the introduction of a generic product. Incontrast, the FTC said that during the previous year only 3drug-industry settlements included provisions underwhich the generic introduction was delayed after compensationwas paid by the branded company.

According to the FTC, the compensation to the genericfirms took different forms, including: (1) payments for copromotingthe brand product; (2) payments for supplying, orbeing available to supply, the brand with raw material or finisheddrug product; (3) an agreement by the brand not tocompete with an authorized generic; (4) payments for intellectualproperty to the brand; and (5) payments as part of acodevelopment project between the brand and the generic.

The federal researchers also found settlements thatrestricted the generic company from marketing productsthat were not the subject of the litigation. "This restrictionappeared in 5 of the settlements, and in all them thegeneric received compensation," the FTC said.