from the and-what-about-all-those-overpayments? dept
For some time now, Techdirt has been following the "pay for delay" scandal, whereby a big pharma company buys off manufacturers of generics so that the former can continue to enjoy monopoly pricing long after its patents have expired. As we've reported, the authorities have finally started to clamp down on this abuse of the patent system. At the end of last year, two drug companies were fined by the European Commission, and now it looks like the FTC wants to follow suit, as the Wall Street Journal reports:
For the first time since the U.S. Supreme Court ruled last year that so-called pay-to-delay deals may be subject to greater antitrust scrutiny, the U.S. Federal Trade Commission has filed a lawsuit charging drug makers with violating anti-trust laws and hurting consumers in their collective pocketbooks.
The article includes some details on how the "pay for delay" deals worked:
Specifically, the agency charged several drug makers -- including AbbVie, Abbott Laboratories, which spun off AbbVie, and Teva Pharmaceuticals -- for striking deals that delayed the availability of the widely promoted AndroGel testosterone replacement therapy, a $1 billion seller.
In its lawsuit, the FTC charges that AbbVie, Abbott and Bevins Healthcare filed “sham” patent litigation against potential generic rivals, including Teva, and then entered into an allegedly illegal patent settlement in order to thwart competition.
Although it's great that the FTC is finally tackling this problem, it's regrettable that it had to wait so long for that ruling by the Supreme Court (pdf) to give it the legal basis for pursuing pharma companies:
The FTC had spent years trying to convince Congress and the courts that pay-to-delay deals hurt the economy. The agency, in fact, regularly released reports estimating the deals cost consumers dearly. In the last such report, which was issued in early 2013, the agency estimated the deals cost Americans $3.5 billion annually and contributed to the federal deficit.
The delay in bringing these cases doubtless means that the companies engaging in this behavior have made some serious profits as a result -- and that the public has been forced to pay billions of dollars unnecessarily.