FTC Accuses Firms Of Delaying Generic Drug Launch

By: By MATTHEW PERRONE, AP
By: By MATTHEW PERRONE, AP

WASHINGTON (AP) - Federal regulators accused Solvay Pharmaceuticals and three generic drugmakers on Monday of illegally
agreeing to keep cheaper versions of a lucrative hormone-boosting
drug off the market.

The lawsuit from the Federal Trade Commission alleges that Brussels, Belgium-based Solvay agreed to share its profits with the generic firms provided they did not launch their low-cost versions until 2015. Androgel, a gel-based testosterone drug, is Solvay's best-selling product with U.S. sales over $300 million.

Instead of competing against Solvay, the FTC states that the generic companies agreed to help market and manufacture Androgel.

"These agreements deny consumers the opportunity to purchase lower-cost generic versions of AndroGel, at a cost of hundreds of millions of dollars a year," the FTC states in its complaint, filed in a U.S. District Court in California.

Solvay said in a statement it is "disappointed but not discouraged by the decision," and would "use all necessary means to defend" the agreement.

The generic drugmakers named in the lawsuit are Corona, Calif.-based Watson Pharmaceuticals; Woodcliff Lake, N.J.-based Par Pharmaceutical Co.; and privately held, Minneapolis-based Paddock
Laboratories.

The lawsuit marks the second time in less than a year that the FTC has challenged so-called "pay to delay" settlements, in which branded drug companies reward their generic competitors for staying off the market.

Traditionally, generic drugmakers challenge the patents on branded drugs in an effort to market their own versions. Pharmaceutical industry advocates say the settlements help resolve costly legal battles that might otherwise drag on for years.

However, the FTC argues that the settlements are anticompetitive and hurt consumers by clogging the pipeline for cost-saving drugs.

Despite its criticisms, the FTC has had a mixed track record at challenging the agreements. Two appeals courts in 2005 upheld the
legality of agreements reached by Schering-Plough Corp. and AstraZeneca PLC with generic companies.

Since then, lucrative settlements between generic and branded drugmakers have flourished. According to the FTC, nearly half of all settlements between 2006 and 2007 involved payments to keep low-cost drugs off the market.

"The trend tells us we need to redouble of efforts to stop these unconscionable 'pay to delay' settlements," said FTC Commissioner Jon Leibowitz. "They force consumers to overpay for much-needed generic drugs."

Along with court challenges, Leibowitz and others at FTC are pushing a bill that would ban the agreements, while allowing legitimate settlements.

Leibowitz said he's optimistic the measure could become law this year, considering its sponsorship by key lawmakers, including Sen. Dick Durbin, D.-Ill.; Charles Grassley, R-Iowa; and now-President Barack Obama.

Among other health care goals, Obama has pledged to lower the costs of medical care, including prescription drugs.

Last February the FTC accused Cephalon Inc. in a lawsuit of illegally blocking generic competition to its drug Provigil, which combats sleepiness in patients with sleep disorders.

The FTC said the company paid four generic drugmakers $200 million as part of agreements reached in 2005 and 2006.
--
AP Business Writer Damian Troise contributed to this story from
New York.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

AP-NY-02-02-09 1345EST


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