Generic Drug Patent Settlements

Posted on: October 23, 2009  |   Author: Ali
Filed Under: Drug & Device, Health I.P., Life Sciences, Other, Tax & Finance   |   Leave a Comment

Generally, most patent lawsuits are resolved when the accused infringer agrees to pay money to the patent rights-holder.  However, in patent infringement suits involving generic pharmaceutical manufacturers these agreements sometimes follow a different path.  Occasionally, the patent-holder will give the generic drug manufacturer money to delay the release of the generic drug (the Federal Trade Commission calls this a “pay for delay” deal).

These payments ultimately delay the introduction of generic drugs and FTC Chairman Jon Leibowitz estimates that “pay for delay” deals cost consumers, insurance companies, and the federal government spends an additional $3.5 billion each year (the drug manufacturers dispute this estimate).

The first example of this kind of deal was in 1994 when Bristol-Myers Squibb paid Schein Pharmaceutical $290 million to delay the sale of a generic version of Bristol’s Buspar, anti-anxiety drug.  Recently, drug purchasers, including CVS Caremark Corp. and Rite Aid Corp., challenged an agreement between Bayer AG and Barr Pharmaceuticals Inc. where Bayer paid Barr to delay producing a generic version of Cipro, an antibiotic drug.

In July, the Department of Justice stated that these kinds of settlements are “presumptively unlawful”.  Last week, the senate judiciary committee voted 12 to 7 to forbid these deals.  President Obama also supports a ban.

ABC News, October 15, 2009; Wall Street Journal, July 6, 2009; PatentlyO, October 16, 2009.