pay for delay.pdf

Pay-for-Delay: How pany Pay-Offs Cost Consumers Billions Federal mission | An FTC Staff Study January 2010 1 Summary Brand-name panies can delay petition that lowers ● prices by agreeing to pay a petitor to hold peting product off the market for a certain period of time. These so-called “pay-for-delay” agreements have arisen as part of patent litigation settlement agreements between brand-name and generic panies. “Pay-for-delay” agreements are “win-win” for panies: brand-name ● pharmaceutical prices stay high, and the brand and generic share the benefits of the brand’s monopoly profits. Consumers lose, however: they miss out on generic prices that can be as much as 90 percent less than brand prices. For example, brand-name medication that costs $300 per month might be sold as a generic for as little as $30 per month. The Federal mission’s (FTC) investigations and enforcement actions against ● pay-for-delay agreements deterred their use from April 1999 through 2004. 1 In 2003, an appellate court held that such agreements were automatically (or per se ) illegal. 2 Since 2005, however, a few appellate courts have misapplied the antitrust law to uphold ● these agreements. 3 Following those court decisions, patent settlements bine restrictions on generic entry pensation from the brand to the generic have re- emerged. 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 0 2 4 6 8 1 0 1 2 1 4 1 6 1 8 2 0 Agreements with Delay pensation 4 0 3 14 14 16 19 5 2 Agreements pensation from the brand to the generic on average prohibit ● generic entry for nearly 17 months longer than agreements without payments, where the average is calculated using a weighted average based on sales of the drugs. 6 Most of these agreements are still in effect. They currently protect at least $20 billion in sales of brand-name pharmaceuticals from petition. 7 Pay-for-delay agreements are estimated to cost American consumers $ billion per ● year –$35 billion ov