FTC to Challenge Schering-Plough Drug Patent Settlement
The Federal Trade Commission is expected to file an administrative complaint today alleging that a patent settlement between Schering-Plough Corp. and two generic drug makers -- the Lederle unit of American Home Products Corp. and Upsher-Smith Inc. -- includes illegal "payments" that would delay a low-cost generic version of K-Dur, a "widely used" potassium chloride supplement, the Wall Street Journal reports. The agency is expected to argue that Schering-Plough paid Upsher $60 million, "disguised as a licensing payment for other" drugs, and Lederle $30 million to delay introduction of a K-Dur competitor. A Schering-Plough spokesperson said the settlement would still allow the introduction of K-Dur generics "several years before" the drug's patent expires. Each of the companies named in the suit say the settlements are a "legal exercise of patent rights or lawful licensing agreements that didn't harm consumers," the Journal reports. Although federal officials did not comment on the case, FTC Chair Robert Pitofsky has said that drug companies are "gaming" the Hatch-Waxman act that governs market entry of generic drugs, adding that some patent settlements "rob consumers" and take advantage of "loopholes that we hope Congress will close this session" (Wilke, Wall Street Journal, 4/2). The Hatch-Waxman act attempts to balance brand-name drug patents with consumers' need to access lower-cost generic drugs. The legislation also seeks to create "greater competition between generic and brand name drugs." But Rep. Henry Waxman (D-Calif.), the bill's co-author, now says the law has been used "to delay competition, rather than foster it."
The Journal reports that the FTC complaint against the drug makers is the "latest in a widening drug war" by the agency. During the past year, the FTC has investigated four other drug makers and recovered $100 million from Mylan Laboratories Inc. for "attempting to monopolize the market for a generic anti-anxiety drug." In another current case, the FTC is investigating a settlement between Bayer AG and Barr Laboratories, in which Bayer agreed to pay Barr and an affiliate $25 million annually and which delayed introduction of a generic version of Bayer's Cipro, a "blockbuster" antibiotic. However, the "future of the FTC's aggressive enforcement efforts" under a Republican-dominated government is unclear, because although Republicans tend to defer to patent rights, many of the FTC's patent settlement cases have won unanimous support from its board, which includes two Republicans (Wall Street Journal, 4/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.