REVERSE-PAYMENT DEALS ON THE RISE, FTC REPORTS
In the last year, more out-of-court settlements between generic and brand companies involved reverse payment deals than in the two previous years combined, according to a new FTC report.
Of the 28 final settlements the agency received in fiscal 2006, nearly half of them included financial compensation to a generic firm and a promise by the generic firm to delay the launch of its own competing product, two key provisions that constitute a reverse-payment agreement.
The report shows a significant increase in the number of reverse-payment arrangements looked at by the FTC in recent years. In 2005, only three of the 11 settlements filed had both provisions and, in 2004, none of the 14 agreements had both provisions.
The Jan. 17 report, prepared by the FTC's Bureau of Competition, examined settlement agreements filed by pharmaceutical companies to determine how many of them involved resolving patent litigation lawsuits and how many looked like reverse-payment deals.
The report also zeroed in on the type of compensation generic firms received in exchange for delaying market entry. It grouped compensation to generic firms into different categories, including: Payments for co-promoting the brand product; Payments for supplying or being available to supply the brand with raw material or a finished drug product; Agreements by the brand not to compete with authorized generics in the future; and Payments as part of a co-development project between the brand and the generic.
The report was also the subject of a Jan. 17 hearing held by the Senate Judiciary Committee. In response, Generic Pharmaceutical Association President and CEO Kathleen Jaeger called on lawmakers to shape legislation using a case-by-case approach to address antitrust concerns surrounding reverse payments.
A copy of the FTC report is available at www.ftc.gov/reports/mmact/MMAreport2006.pdf (http://www.ftc.gov/reports/mmact/MMAreport2006.pdf).