FTC Cracking Down on Drug Manufacturers' "Pay-for-Delay" Practices

On March 30th, the Federal Trade Commission filed a lawsuit against drug manufacturer Endo Pharmaceuticals, alleging that Endo is paying generic drug manufacturers in order to delay the release of lower cost generic versions of their drugs, Opana ER and Lidoderm.

Generic drugs come to market when the patents on name brand drugs expire. This results in branded drug companies losing their monopoly on the market for these drugs, forcing them to compete for the first time with their lower-cost counterparts. Branded drug manufacturers have figured out that it will cost them less money to pay a settlement to generic manufacturers to delay the release of these drugs rather than to have directly compete with lower-cost versions of their drugs. At the same time, generic manufacturers make money without manufacturing a product. It is a win-win for drug manufacturers, but not necessarily for consumers.

This is not the first time this type of tactic has been used by branded drug manufacturers. In fact, it has been used so often that is has acquired a nickname, “pay-for-delay”, and stopping this practice has become a top priority for the FTC.

This practice has evolved as a result of Hatch-Waxman litigation, known colloquially as Orange Book litigation. Oftentimes, generic manufacturers have to file lawsuits to compel branded drug companies to release expired patents on name brand drugs so they can bring generics to market. This type of litigation has become big business, with billions of dollars at stake. “Pay-for-delay” essentially bypasses this process, saving both branded and generic manufacturers time and money.

To get the latest updates on this case and other Orange Book litigation, attorneys can sign up for Docket Alarm— the only legal research platform that offers attorneys a suite of tools to stay abreast of Orange Book litigation. Users can track updates to the Orange Book, search Orange Book correspondence, and view Patent Trial and Appeal Board analytics for Orange Book litigation. Download Docket Alarm’s free report on Orange Book litigation today at docketalarm.com/welcome/Big-Pharma-Patent-Litigation-Infographic.

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Tara Klamrowski is the director of IP content at One400. She writes about current IP issues, IP trends, and how Docket Alarm can help attorneys and their clients achieve success.

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