A recent U.S. Supreme Court ruling giving regulators the right to sue drugmakers for agreements that delay cheaper generic versions of their products should deter some of the most egregious deals and allow the agency to better fight others, Federal Trade Commission Chairwoman Edith Ramirez told lawmakers on Tuesday.
At issue are deals - often called "pay for delay" - where brand-name drugmakers settle patent infringement lawsuits by paying generic companies to postpone marketing their cheaper versions of the products.
Despite this, defenders of the practice say a generic version of a drug usually comes to market before its patent expires.
Senator Amy Klobuchar, who chairs the Judiciary Committee's antitrust panel, is a critic of the deals and of the argument that they make it easier to end court fights.
"Pharmaceutical litigation can be settled without these cash sweeteners," she said at a hearing to discuss them.
The Supreme Court ruled that regulators could challenge the deals but declined the FTC's request to declare them illegal. The agency has fought the practice for more than a decade.
Following the June 17 Supreme Court decision, the FTC plans to pursue pay for delay cases that it is already litigating and investigate new settlements to determine if they are legal, Ramirez said.
"The vast majority of patent settlements do not involve (pay for delay)," she said. "What we are trying to stop are anti-competitive settlements."
The FTC says the deals cost consumers and the U.S. government an additional $3.5 billion on drug costs each year.
Ramirez stopped short of indicating whether any cases now being considered would likely end in litigation. The FTC identified 40 settlements in the 2012 fiscal year that it considered pay for delay deals.
Speaking for the Pharmaceutical Research and Manufacturers of America trade group, Diane Bieri said it took drug companies $1 billion and 10 to 15 years to bring an innovative product to market.
And, she said, the deals generally allow generic drugs to hit pharmacy shelves before the patent expires.
CASE IN THE PIPELINE
One of the cases the FTC is litigating involves AndroGel, a gel used to treat men with low testosterone.
In that case, brand-name drugmaker Solvay Pharmaceuticals Inc, now owned by AbbVie, had agreed to pay as much as $30 million annually to generic makers Actavis Inc, previously Watson Pharmaceuticals; Paddock Laboratories Inc, now part of Perrigo Co ; and Par Pharmaceutical Cos .
Under the deal, the three would keep their generic versions off the market until 2015. The patent expires in 2020.
Senators Klobuchar, a Minnesota Democrat, and Chuck Grassley, an Iowa Republican, have introduced legislation this year to make the deals illegal until a judge determines otherwise.