The Federal Trade Commission, whose mission is to prevent anticompetitive business practices, has vowed to halt so-called reverse-payment deals, which are unique to the prescription-drug industry.
By buying off generic challengers, the FTC says, brand-name pharmaceutical companies deny consumers access to cheaper drugs.
In a recent high-profile case, Bristol-Myers Squibb offered to pay $40 million to delay the generic launch of its biggest-selling drug, the blood-thinner Plavix, by Canadian drugmaker Apotex. But Bristol-Myers bungled the deal, which led to Apotex flooding the market with copycat Plavix and the U.S. Justice Department launching a criminal investigation.
After Apotex launched the generic in early August, it quickly captured 75 percent of the Plavix market. Since then, New York-based Bristol-Myers, which has 6,000 workers in New Jersey, has fired Chief Executive Peter Dolan and slashed its earnings forecast.
Despite Bristol-Myers' missteps, reverse-payment deals have become increasingly popular as Big Pharma seeks to hold off generic competition.
Seven out of 10 settlements between pharmaceutical patent holders and generic challengers this year have included a payment to the generic company in exchange for delaying the launch of low-cost drugs, according to FTC figures. Between 2000 and 2004, there were no reverse-payment deals, the FTC said.
And with the patents on 70 blockbuster drugs -- with a total of $48 billion in annual sales -- set to expire by 2011, the industry expects reverse-payment deals to proliferate further.
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