Pay-for-delay deals disappearing, FTC says

• Legal settlements extending market exclusivity of branded drugs near the end of their patent life rose in 2016, a new report from the Federal Trade Commission found, but almost none of those agreements included a monetary payment from branded drugmakers to generic rivals, commonly known as “pay for delay.”
• The FTC noted, however, that such legal settlements may impede price competition for drugs when branded manufacturers agree to keep so-called “authorized” generics off the market during the first six months of a generic launch, keeping prices artificially high.
• Generic competition is often cited as a counterbalance to high drug prices, and the Food and Drug Administration approved a record number of copycat drugs in 2018 in pursuit of that goal. Legal delays can help branded manufacturers extend their revenue stream beyond expected patent expirations.

For years, the FTC has denounced “pay-for-delay” deals under which branded manufacturers explicitly compensate generic manufacturers to stay off the market past the expiration of patent-protected drugs.

Big pharma companies calculate that the payments are worth it because there are millions of dollars in revenue to be gained for every day a blockbuster drug faces no price competition — AbbVie’s Humira (adalimumab), for example, logged $36 million a day in U.S. sales in the first quarter of 2019.

The new report summarizes the terms of 232 settlement agreements between brand and generic manufacturers in the federal fiscal year that ended Sept. 30, 2016. These are required disclosures under the Medicare Modernization Act.

Thirty of the settlements include some form of compensation and a delay in generic entry, although 29 of those consisted of reimbursement for litigation costs. The last one contained a promise from the branded manufacturer not to launch an authorized generic for a certain amount of time, which could help a “first-to-file” generic manufacturer because of the 180-day exclusivity period it receives on generic sales.

Another 14 agreements contained “possible compensation,” but the FTC passed no judgment on these because they require “inquiry into specific marketplace circumstances, which lies beyond the scope of this summary report.”

In nine, the FTC said the branded manufacturer pledged not to allow a third-party distribute an authorized generic for a period of time, which could have the same effect as a deal not to launch an authorized generic. Three include a royalty payment from the generic manufacturer to the branded company that declines in the event of an authorized generic launch, which in theory would have a similar impact.

The Association for Accessible Medicines, a trade lobby representing the generic industry, seized on the report as evidence new legislation targeting pay-for-delay deals isn’t needed.

“By FTC’s own account, current law is working and reverse payment settlements are no longer a systemic problem,” AAM wrote in a statement. “We urge policymakers to revisit the need for legislation given this new report from the FTC.”

The period covered by the FTC’s report coincides with the arrival of biosimilars in the U.S., and the FTC has now been given the authority to examine any deals between biological manufacturers such as AbbVie and copycat competitors.

AbbVie CEO Rick Gonzalez said biosimilar Humira launch, which will happen six months after primary patents expire in 2022, has been “fairly negotiated” and does not contain any payment to the biosimilar makers, which are led by Amgen with Amgevita (adalimumab-atto).

“Instead … there are royalties paid to AbbVie for specified amounts for a defined period of time by the biosimilar player to be able to enter the market and use those patents,” Gonzalez said during his company’s first-quarter 2019 earnings call. “That’s exactly the kind of arrangements that promote competition in markets around the world.”

https://www.biopharmadive.com/news/pay-for-delay-deals-disappearing-ftc-says/555546/