In a recent report, the U.S. Federal Trade Commission released an update on patent settlements between brand-name and generic drug makers, but for the first time, mentioned a maneuver used by these companies that may raise a different type of antitrust concern.
These settlements can be traced to a law passed 40 years ago that was designed to speed the entry of lower-cost generics to the marketplace. The legal machinations are complicated but the process hinges on the timing of patent expirations and, specifically, the subsequent deals reached by brand-name and generic manufacturers that determine when a copycat drug can be sold.
Basically, a brand-name drug company settles a patent infringement lawsuit by paying cash or transferring something else of value to an erstwhile generic rival, which agrees to delay launching its copycat medicine until a specific date in the future. This gives the brand-name company more time to sell its medicine without lower-cost competition.
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