GPhA: FTC's Policy on Patent Settlements Would Be Costly

Generic Pharmaceutical Association (GPhA) President and CEO Ralph G. Neas has issued a response to the Federal Trade Commission’s staff report regarding patent settlements, saying that the current policy “would be costly for consumers, the health care system, and state and federal governments because it would result in delaying access to lower cost generic medicines.”

Patent settlements, he said, facilitate the availability of less costly generic drugs and can result in cost savings. “Banning settlements and forcing drugs makers to continue lengthy litigation with uncertain outcomes will be costly.”

According to Neas, data collected over the past decade show that generic companies win just 48% of the patent cases that are litigated to conclusion. “This means that generics are delayed from entering the market until the brand patent expires in more than half the cases where there is no settlement. But, when companies enter into settlement agreements, the generic drug enters the market before patent expiration in 100% of the cases,” he noted. “Patent settlements have never delayed access to the generic past the patent expiration date, but instead provide the one sure way of getting the lower cost generic to consumers and patients before the patent expires on the counterpart brand drug.”

This year, 16 of the 22 first-time generic medicines that will become available in the United States are entering the market prior to patent expiration because of a settlement agreement. Included among these products are generic versions of Lipitor, Plavix, and Effexor XR. If settlements were banned, none of these medicines would be available as generics until next year or later, he added.

Neas cited a number of studies suggesting that the savings projected by the FTC and the Congressional Budget Office are based on faulty assumptions, and noted that the generic industry supports current law requiring drug makers to submit patent settlements to the FTC and the US Department of Justice for review. “These government agencies are authorized to reject any patent settlement that they deem to be anticompetitive. But, as the federal courts have ruled in no fewer than 5 settlement decisions, it’s the patent that delays the generic from coming to market, not the settlement. Settlements allow generics to enter the market months and even years before patents expire,” he said.

“Instead of lobbying the Super Committee to ban these pro-competitive, savings-generating settlements, the FTC and Congress should focus on initiatives that would continue to dramatically reduce prescription drug spending; namely, promoting the increased utilization of generics for federal and state government funded health care programs and accelerating the approval of more affordable generics by increasing funding for the Office of Generic Drugs.”

An independent analysis released in September 2011 shows that the use of generic prescription drugs in the US has saved consumers and the health care system $931 billion over the last 10 years, including $158 billion in 2010 alone.

To read the full statement, click here.