US FTC report shows brand-name drug firms pay generics makers to stay off market

For the first time since the US Federal Trade Commission's investigations into pharmaceutical patent settlements became public and based on the information available to the Commission, and for the first time since 1999, drug companies have entered into settlement agreements that included both compensation to the generic company and some form of restriction on the generic's ability to market its product. This information was noted in a summary of agreements filed with the FTC in the fiscal year ending September 30, 2005, by generic and branded drug manufacturers. The report, issued by the FTC's Bureau of Competition, was based on filings with the FTC and the Department of Justice that were required under the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

The summary provided information regarding the 20 agreements that were filed with the FTC in FY 2005, involving 16 different products. It also compares FY 2005 data with those received in FY 2004 and with findings of the Commission's 2002 study entitled Generic Drug Entry Prior to Patent Expiration. Among the information contained in the report was the fact that agreements restricting the marketing of generics are resuming.

Based on the information reported in the Commission's 2002 study and on settlements disclosed between 1999 and 2004, no patent settlements included both compensation to the generic firm and a restriction on its ability to market its product. In contrast, three settlements submitted in FY 2005 included those terms.