For years, Big Pharma has kept competition from generic drug makers at bay by essentially paying its would-be rivals to stay out of its business. Now government watchdogs have declared war on these financial deals - a move that could bring cheaper drugs to market faster while costing giant drug developers billions in lost revenue.
Just last week the Federal Trade Commission launched a high-profile battle against Cephalon, the maker of the blockbuster narcolepsy medication Provigil, over a $200 million payout it gave to four generic companies in exchange for an agreement not to develop a competing medication. In a lawsuit filed in federal court in Washington, D.C., the FTC claims that the deal violates antitrust law.
The deals behind the FTC crackdown have become increasingly common ever since Congress opened the door for generic drug competition in 1984. That's when a new federal law allowed generic drugmakers to challenge patents held by brand-name pharmaceutical companies in court. As these lawsuits grew in number, Big Pharma started to broker settlements whereby the generic companies agreed not to develop a competing drug in exchange for a onetime payment, often totaling millions of dollars.
The FTC says there have been 100 deals like this since 2004.
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