FTC campaigns against 'pay-for-delay'

The U.S. Federal Trade Commission (FTC) is trying to stop drug companies from paying each other not to introduce competing products, according to commission Chairman Jon Leibowitz.

In July 27 testimony before the U.S. House of Representatives Committee on the Judiciary's Subcommittee on Courts and Competition Policy, Leibowitz said "pay-for-delay" is a top priority for the commission.

In these sweetheart deals, makers of branded drugs pay competitors to delay introducing generic versions. The deals cost consumers an estimated $3.5 billion a year, the FTC said.

Drug companies entered into 21 suspect patent litigation settlements involving compensation in the first nine months of fiscal 2010 alone, which is more than the total for the entire previous fiscal year, the commission said. Those settlements protect $9 billion in prescription drug sales from generic competition, the FTC testified.

The agency is trying to halt the practice by filing antitrust lawsuits against drug companies involved, but has often been stymied by unfavorable court rulings, Leibowitz said. "Legislation would be the most effective way to stop these deals."

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