FTC fights increasing patent settlements
The issue of patent settlements, their effect on drug prices and availability, and by extension their legality has been around for a long time and will likely remain an issue for years to come. But according to a report released in May by the Federal Trade Commission, the settlements have been on the rise, increasing from 16 in 2009 to 31 in 2010.
Patent settlements often occur when a generic drug maker files with the Food and Drug Administration for approval of a version of a branded drug that has not lost patent protection. Under the terms of the Hatch-Waxman Act of 1984, the branded drug company is entitled to sue the generic company, which puts an automatic stay of final FDA approval on the generic for two and a half years or until the two parties settle the matter before the court. In practice, what often happens is that the companies will reach a deal that allows the generic manufacturer to launch months or even years before loss of patent protection, in exchange for not launching immediately; delaying launch after a patent has expired would be illegal.
Under the leadership of chairman Jon Leibowitz, the FTC has positioned itself as a sworn enemy of the deals, deriding them as “pay-for-delay” settlements that keep generic drugs out of consumers’ hands. “Collusive deals to keep generics off the market are already costing consumers and taxpayers $3.5 billion a year in higher drug prices,” Leibowitz said when the FTC report was released. “The increasing number of these deals is a win-win proposition for the pharmaceutical industry, but a lose-lose for everyone else.”
In July, the Senate Judiciary Committee voted in favor of the Preserve Access to Affordable Generics Act, introduced in January by Sen. Herb Kohl, D-Wis., though previous attempts to ban patent settlements have proven unsuccessful.
The generic and branded drug industries have defended the settlements, saying that they usually allow generics to reach the market before patent expiration. The Generic Pharmaceutical Association called Kohl’s bill “misguided,” noting that the bill would retroactively extend the ban on patent settlements to products already on the market, which could possibly result in the drugs being pulled from the market. “The legislation considered [on July 21] by the Judiciary Committee has repeatedly garnered bipartisan opposition and failed to receive support from the full Congress,” the GPhA said. “Moreover, the courts have consistently held that these settlements are pro-consumer and pro-competitive.”
The group also said that of the 23 new generic drug launches expected in 2011, 17 would launch before a patent’s expiration because of patent settlements.
”It is also important to recognize that many of these drugs — including generic versions of Lipitor and Plavix — will become available later this year because of a pro-consumer patent settlement,” GPhA executive director Bob Billings said. “If such agreements were outlawed, patients could be forced to wait at least an additional five years for access to either of these lifesaving medications, a delay that would cost consumers and the U.S. healthcare system billions of dollars.”
NEW YORK — It is no secret that nail polish is hot, and today’s beauty mavens are changing their nail shades as frequently as they change shoes or purses to complete an outfit or look. So why not offer a broad assortment of shades packaged in smaller bottles; after all, how many women finish an entire bottle of nail polish? Enter Pixel from Innovative Beauty.
Packaged in mini bottles (0.17 fl. oz.), the new Pixel brand is aptly named after the single point in a graphic image. The collection is comprised of 72 different shades, priced at $2.49 each, to bring even greater flexibility and accessibility to nail enamel.
Pharma faces its own hurricane season
At press time, Hurricane Irene was slowly barreling toward the East Coast and threatening the area with a deluge that prompted cities to shut down and had store shelves wiped clean.
A similar phenomenon is happening in the drug industry as the patent cliff barrels, Irene-like, toward branded and generic drug manufacturers alike, forcing them to scramble for new sources of revenue in the coming years. According to IMS Health, $102 billion worth of drugs will face generic competition between 2011 and 2015. This presents problems for branded drug companies, which must find a new business model to replace the traditional blockbuster drug model, as well as generic drug companies, which will find themselves competing for an ever-dwindling pool of top-selling molecules. “The most important [trend] has been the wave of patent expiries,” IMS Health VP industry relations Doug Long told Drug Store News.
Chief among these is Pfizer’s Lipitor (atorvastatin calcium), a drug with sales more than $7 billion per year in the United States alone and which is scheduled to go generic by the end of this year. A chance remains that Ranbaxy, the company planning to launch the generic, might face delays in getting approval from the Food and Drug Administration due to concerns about problems at its manufacturing plants in India. Watson is planning to launch an authorized generic version of the drug around the same time.
After the patent cliff, one trend that will likely accelerate is consolidation among generic drug makers. “I think you’ll see more of those types of things,” Long said. “I think the market’s still not consolidated enough. When some of these small molecules [decrease] after 2014, there will be more mergers.”
One merger highlighted by Long was Par Pharmaceutical’s acquisition last month of Anchen Pharmaceuticals, a $410 million deal that gave Par access to Anchen’s portfolio of injectable drugs. While companies like Hospira have long specialized in generic injectables, it’s a field in which many generic companies may take an increasing interest in the years to come. “People are starting to expand outside the oral solid generic business and getting into other, more specialty types of generics, like injectables in particular,” Long said.
Authorized generics may represent another area of opportunity. To be sure, authorized generics are controversial in the generics business, with groups like the Generic Pharmaceutical Association opposing them. Authorized generics are branded drugs marketed under their generic names at a reduced price, usually through a third-party company, such as the case with Watson’s authorized generic version of Lipitor. Under the Hatch-Waxman Act of 1984, the first company to file and win approval from the FDA for a generic version of a drug gets 180 days in which to market the drug in direct competition with the branded version, after which any generic company can apply for approval of a generic version, eventually resulting in the molecule becoming commoditized.
But with authorized generics, the branded company can compete with the generic company on two fronts: one with its branded version and one with the cheaper authorized generic marketed by a third-party company. A number of traditional generics companies, such as Watson and Sandoz, market authorized generics, while others, such as Prasco, specialize in them. Despite the GPhA’s opposition, a study by the Federal Trade Commission found that while a generic drug could drive down the cost of the average $100 prescription by between $18.30 and $81.70, an authorized generic could drive it down by a further $8.10.