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Pay-for-delay deals resulted in US patients paying on average 10 times more than necessary for at least 20 blockbuster medications, according to a new report.

By Ben Steele on Jul 19, 2013

These deals have kept generic versions of patented meds off the market for an average of five years, and in some cases as many as nine years, allowing branded drug companies to rack up $98 billion in sales, says the report from Community Catalyst and the US Public Interest Research Group (USPIRG). Moreover, the findings are described in the report as “just the tip of the iceberg.”

The report cited one pay-for-delay deal which kept a generic version of the breast cancer therapy tamoxifen off the US market for nine years, and also mentioned Pfizer’s cholesterol-lowering Lipitor (atorvastatin), which made $7.4 billion in sales in the last year of its pay-for-delay deal alone.

However, these findings have been dismissed by the Generic Pharmaceutical Industry Association (GPhA) for being “based on a single, flawed premise - that those generic drug manufacturers that pursue patent challenges would win in court virtually every time.” Instead, the GPhA writes, “generic companies who challenge brand drugs with the goal of bringing consumers low cost generic options win only 48% of the time,” making litigation to conclusion “a total crapshoot.”

The GPhA has published its own report which argues that patent settlements saved the US health system $25.5 billion during 2005-2012, and were responsible for bringing generics to market 81 months on average before patent expiry. The study, which was commissioned by the GPhA from the IMS Institute for Healthcare Informatics, predicted an extra $61.7 billion of savings if the current level of saving continues through to patent expiry for all of the 33 molecules analysed. The Lipitor settlement, for instance, will save the US $22 billion over the next four years. GPhA chief executive Ralph Neas said this was “critical for lawmakers to understand, because any further restrictions on settlements will put these savings at risk.”

The debate over pay-for-delay agreements continues in the US after a recent Supreme Court rulingfound that such agreements can be challenged in court by US regulators but are not in themselves illegal. The Federal Trade Commission (FTC), which brought the case, claims that pay-for-delay settlements cost consumers up to $3.5 billion in inflated prices last year. Two bipartisan bills relating to these settlements have been introduced into the Senate; the Preserve Access to Affordable Generics Act, which seeks to brand pay-for-delay deals as unlawful and anticompetitive, and the FAIR Generics Act, which aims to reduce the incentive for these deals by allowing a second generic competitor to enter the market if the first concludes a pay-for-delay deal.