[Ip-health] Financial Times- White House tilts at barrier to cheap drugs

[Terri - Louise Beswick]

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White House tilts at barrier to cheap drugs=0D
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By Stephanie Kirchgaessner in Washington=0D
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Published: February 22 2010 22:30 | Last updated: February 22 2010 22:30=0D
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The Obama administration=E2=80=99s healthcare proposal would prohibit big b=
randed drug makers from agreeing multibillion-dollar deals with rivals in t=
he generic industry that keep cheaper drugs off the market.=0D
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If the proposal becomes law, the prohibition of so-called pay for delay set=
tlements would be a significant blow to drugmakers such as Roche and GlaxoS=
mithKline but a win for the Federal Trade Commission. The regulator, which =
has had little success in challenging such agreements in court, estimates t=
hat such agreements cost US consumers $3.5bn (=E2=82=AC2.6bn, =C2=A32.3bn) =
in higher prices a year, or $35bn over the next 10 years.=0D
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The deals occur when a generic drug company sues a rival in the branded ind=
ustry to gain market entry for a drug still under patent. Because generic c=
ompanies usually win, branded drug makers often settle and negotiate a date=
 for entry before a patent is set to expire. Such deals are considered anti=
competitive, and termed pay for delay, only when they include a payment by =
the branded drug maker to the generic rival. According to an FTC analysis, =
deals that involve a payment on average prohibit generic entry for almost 1=
7 months longer than agreements without payment.=0D
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The European competition watchdog has stepped up scrutiny of such deals, as=
king AstraZeneca <http://markets.ft.com/tearsheets/performance.asp?s=3Duk:A=
ZN> , GSK <http://markets.ft.com/tearsheets/performance.asp?s=3Duk:GSK> , R=
oche <http://markets.ft.com/tearsheets/performance.asp?s=3Dch:RO>  and Sano=
fi-Aventis <http://markets.ft.com/tearsheets/performance.asp?s=3Dfr:SAN> , =
among others, for more information on the practice.=0D
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The Obama administration=E2=80=99s proposal would adopt a provision passed =
in the House but not in the Senate. It would give the FTC authority to bloc=
k deals in which a generic producer receives =E2=80=9Canything of value=E2=
=80=9D from a branded rival to =E2=80=9Climit or forego research, developme=
nt, marketing, manufacturing or sales=E2=80=9D of the cheaper drug.=0D
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The White House provision would also require the chief executive of the bra=
nded group to certify the accuracy of any agreements filed with the FTC. Th=
e settlements would be allowed only if the companies could prove their meri=
t.=0D
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Jon Leibowitz, the FTC chairman, was =E2=80=9Cdelighted=E2=80=9D by the pre=
sident=E2=80=99s support, saying the ban would help control drug costs. =E2=
=80=9CWhen drug companies agree not to compete, consumers lose,=E2=80=9D he=
 said.=0D
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But the provision also raises legal questions. From 1999 to 2004, US appell=
ate courts largely supported FTC efforts to deter the use of pay for delay.=
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Since 2005, however, appellate courts examining the legality of such pay fo=
r delay transactions have largely favoured branded drug makers. Since then,=
 according to the FTC, patent settlements involving payments from branded d=
rug manufacturers to generic producers have re-emerged.=0D
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http://www.ft.com/cms/s/0/8deb2470-2000-11df-81a2-00144feab49a.html?nclick_=
check=3D1=0D
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