Ending settlements in which branded drug makers pay generic ones to delay entry into the market, known as “pay-for-delay” settlements, would save consumers $3.5 billion a year , plus “significant savings” for the federal government, according to Federal Trade Commission Chairman Jon Leibowitz. In his speech to the Center for American Progress today, Leibowitz said that stopping such deals is an FTC priority and urged Congress to pass legislation to ban or limit such patent settlements, which the agency believes to be anticompetitive. Yesterday, the Supreme Court declined to hear such a case involving the nearly $400 million Bayer paid to Barr and other companies to keep generic versions of its antibiotic Cipro off the market until Bayer’s patent expired. These types of settlements can be lucrative for both parties. For instance, Pfizer will reap billions in additional revenue for settling its fight with Ranbaxy over Lipitor. The two companies

agreed Ranbaxy could start selling the cholesterol drug in late 2011, rather than in 2010, which Ranbaxy was pushing for. Ranbaxy, in return, gets six-month head start of being the only generic atorvastatin on the market. “From my perspective,” Leibowitz said, “the decision about whether to restrict pay-for-delay settlements should be simple.” He continued: On the one hand, you have savings to American consumers of $35 billion or more over 10 years – about $12 billion of which would be savings to the federal government – and the prospect of helping to pay for health care reform as well as the ability to set a clear national standard to stop anticompetitive conduct. On the other hand, you have a permissive legal regime that allows competitors to make collusive deals on the backs of consumers.

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‘Pay-for-Delay’ Deals Cost Consumers $3.5 Billion a Year