- The Washington Times - Friday, October 5, 2007

The Federal Trade Commission and the Justice Department are at odds over whether brand-name drug companies should be permitted to pay generic competitors to keep their products temporarily off the market.

FTC Chairman Deborah Platt Majoras said last week at a hearing of the House Judiciary Antitrust Task Force subcommittee that “exclusion payment settlements” — a practice in which brand-name pharmaceutical companies pay generic ones to delay market entry of their products — “present one of the greatest threats” that consumers face today.

The FTC’s position on reverse payments is at odds with a more powerful federal force — the Department of Justice. The solicitor general has submitted two position briefs to the Supreme Court asking it to back off the issue. Each time, the judges have sided with the solicitor.

According to Ms. Majoras, “people are being harmed” by reverse payment agreements. At the hearing, she urged Congress to pass legislation prohibiting such agreements, with exceptions for settlements that do not limit competition.

The agency has filed several antitrust lawsuits against drug companies for these types of payments. Last year in FTC vs. Schering-Plough Corp., the agency took the position that settlement of a challenge to an innovator brand”s patents, which includes payment to the generic company along with a possible delay in generic product market entry, violates antitrust law.

The 11th Circuit Court of Appeals did not agree. When the FTC attempted to bring the case to the Supreme Court, the Bush administration made its stance on the issue clear. In that case, the solicitor general told the high court that no conflict of interest existed that would warrant the court to hear the case. Subsequently, the Supreme Court denied hearing the case.

At the time, Ms. Majoras said the number of reverse payments “definitely went up.”

For drug companies, patents and the protections that they bring from generic competition are critical. Without patent protection, the companies would have a tougher time conducting research that results in new drugs. According to industry analysts, from 2001 to 2005, drug companies lost a record amount of sales from medicines once covered by patents.

The rift between the FTC and Solicitor General’s Office emerged again when the two sides squared off over the issue in May. In a class-action lawsuit being considered by the Supreme Court that involves AstroZeneca PLC and Barr Pharmaceuticals Inc., a coalition of 17 consumer groups filed several lawsuits against the drug companies, charging that they illegally kept a generic version of an important breast cancer drug, Tamoxifen, off the market.

The solicitor’s office once again told the court it should not consider the case and, once again, the Supreme Court refused to hear the case.

The negative opinion from the Department of Justice further shows their attitude toward the FTC’s policy on reverse payments. The solicitor general is independent of the Justice Department but is unlikely to issue an opinion that contravened its views.

Health Care runs on Fridays. Contact Gregory Lopes at 202/636-4892 or glopes@washingtontimes.com.

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