FTC Gets $1.2 Billion From Drug Company Over 'Pay For Delay' Patent Scam

from the one-down dept

For many years now, we've been covering the pay for delay scam that many pharmaceutical companies have used to effectively pay generic drug makers not to compete with them, even though they are able to do so. The full details of how the scam works are complex, but involve abusing a ridiculous part of the Hatch Waxman Act that grants additional monopoly benefits to the first market entrant of a generic drug. The big pharma firms used that to their advantage, filing bogus lawsuits against those generic drug makers and then agreeing to "settle" the lawsuit they filed by paying the generic drug maker to not actually enter the market. The greater monopoly protection afforded to the big pharma company more than makes up for how much they have to pay the generic drug maker. In short, it's taking advantage of the stupidity of giving drug companies massive monopolies.

The FTC started looking into these practices years ago, and two years ago the Supreme Court ruled that the FTC had every right to go after drug makers using antitrust laws over these "deals." And the FTC has been filing lawsuits on an ongoing basis about these deals.

Teva has now settled one such case for a cool $1.2 billion -- giving you a sense of just how valuable it has been to these pharma companies to extend their monopoly, keep out competition and keep drug prices artificially high. With Teva, it was the sleep disorder drug provigil (and, technically, the drugmaker was Cephalon, which Teva then bought). Teva had been fighting with the FTC for years over this, and the case was scheduled to go to trial next week -- but the settlement ends that. The amount, $1.2 billion, by the way, is the largest ever settlement with the FTC. You have to imagine that there will be more of these coming considering the number of other lawsuits and the fact that "pay for delay" was a widespread practice in the pharma industry.

Of course, even with all of this abuse, some people still insist that giving monopoly rights to pharmaceutical companies is the best way to produce new medicines and to provide healthcare. Isn't it about time we began to question those assumptions?

Filed Under: ftc, generic drugs, hatch waxman act, patents, pay for delay, pharmaceuticals, provigil
Companies: cephalon, teva