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FTC pushes for ban on drug settlements

January 14, 2010
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According to the Associated Press, the Federal Trade Commission claims that patent settlements between drugmakers that cost U.S. consumers billions each year are on the rise. The agency has waged a campaign against so-called "pay-to-delay" settlements, in which a branded drug company rewards a generic competitor for keeping cheaper versions of its drugs off the market. Agency officials estimate the deals cost American consumers $3.5 billion per year in unnecessarily high drug prices. Representatives for both branded and generic drug industries have argued that patent settlements are a useful way to resolve costly litigation, which would otherwise delay drug launches even longer. FTC Commissioner Jon Leibowitz joined House lawmakers at a press conference to urge Congress to include a ban on the settlements in the health care overhaul bill being negotiated on Capitol Hill. They point to an analysis from the Congressional Budget Office estimating the measure could save the government $1.8 billion in spending over the next decade. The restrictions on patent settlements are included in the House bill, but not the Senate version. Democratic lawmakers are now trying to combine the two versions. Under pay-to-delay agreements, the generic drugmaker settles in exchange for either cash or exclusive rights to market the first generic version later. The FTC criticizes such arrangements as anticompetitive, though agency lawyers have a mixed track record of challenging them in court.
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