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Drug makers take new tack against generics

The Boston Globe, September 2, 2011

Some drug makers are using an indirect method to delay competition from low-cost generic products by promising not to introduce their own generic versions if a potential competitor delays its entry into the market, the Federal Trade Commission said in a report yesterday. Until lately, the so-called pay-for-delay cases have focused mostly on cash payments by drug companies to settle patent litigation with generic competitors in return for concessions on when to enter the market. These new agreements add a twist to the patent settlements. The industry contends they are legal business decisions. The FTC says they are illegal sweetheart deals that cost consumers $3.5 billion a year. "Win-win for the companies, but lose-lose for consumers," the FTC chairman, Jon Leibowitz, said in an interview yesterday after the agency released a 270-page study on so-called brand-name generics. The Generic Pharmaceutical Association called the study part of a "misguided policy to ban pro-consumer patent litigation settlements." The system works, the industry trade group said, noting that 17 of 23 expected generic drug introductions this year, such as Lipitor and Plavix, will be the result of patent settlements.