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Drug makers and generic manufacturers colluding to inflate drug prices, says Federal Trade Commission

Posted by John Hadden | Jul 01, 2010 | 0 Comments

According to an article in this week's Bloomberg Businessweek (June 28 - July 4, 2010, pp. 20-21), the Federal Trade Commission (FTC) is taking action against name-brand and generic drug manufacturers for a practice that it says violates federal antitrust laws and ultimately increases the cost of medication to consumers.

Under US law, a patent is valid for 20 years from the first filing.  A patent can be challenged, however, on a number of grounds, and if struck down, the invention can sometimes become public domain before the expiration of the 20-year term.

According to the FTC, it has become a common practice for generic drug manufacturers to file challenges to name-brand patents.  Rather than argue their cases in court, however, the generic and name-brand manufacturer often enter into an agreement whereby the name-brand manufacturer pays the generic company to drop its claims, often in the form of a yearly payment each year for the life of the patent. 

In one example cited by Businenessweek, Barr Pharmaceuticals filed a challenge to the patent of Bayer's product Cipro, an antibiotic effective against anthrax.  Barr dropped its claim after Bayer agreed to pay the company $398 million over six years.  The agreement was approved by the Second Circuit Court of Appeals, a federal court in New York, but that approval is now being reviewed at the insistence of the FTC.

FTC chairman Jon Leibowitz says this practice, which he calls a "pay-to-delay" scheme, results in increased drug prices costing consumers as much as $3.5 billion per year.

About the Author

John Hadden

John D. Hadden is the owner and founder of the Hadden Law Firm. An experienced trial and appellate lawyer, he is author of three respected treatises on Georgia litigation practice: Greens Georgia Law of Evidence, Georgia Law of Torts - Trial Preparation and Practice, and Georgia Magistrate Court...

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