In the current economic slump, generic versions of branded drugs have become a bigger thorn in innovators’ sides than before. To safeguard their profits for just a bit longer, many companies have paid generic-drug manufacturers to delay the introduction of their products to the market. US and European authorities have called these arrangements anticompetitive, though, and events on Capitol Hill last week indicate that they might not be tolerated much longer.
Jon Leibowitz, chairman of the Federal Trade Commission (FTC), testified to a US House of Representatives subcommittee last Tuesday that pay-for-delay settlements were on the rise. During the first nine months of fiscal 2010, companies entered into 21 suspect patent-litigation settlements—more than the total for the entire previous fiscal year. Every FTC commissioner since the Clinton administration has opposed these settlements, and ending them is one of FTC’s top priorities, Leibowitz said.
Some lawmakers seem to be siding with Leibowitz, too. Two days after his testimony, the US Senate Appropriations Committee voted to pass the Preserve Access to Affordable Generic Drugs Act, which would restrict pay-for-delay settlements. The act would presume such settlements to be illegal and anticompetitive unless companies proved to FTC that they did not restrict competition. Previous attempts to pass similar bills have failed, however, and it remains to be seen whether a ban on pay-for-delay settlements will become law.
But at least one drugmaker is attempting to break its dependence on patents, thus softening the blow of generic competition. Chris Viehbacher, CEO of sanofi-aventis (Paris) told the Associated Press last week that his company will move away from blockbuster drugs and instead focus on smaller patient groups, emerging markets, consumer-health products, and even generic drugs. Viehbacher’s strategy reflects the industry’s increasing interest in niche products, orphan drugs, and the developing world.
If sanofi-aventis can remain profitable with its new focus, it could point the way forward for the rest of the industry. In the absence of strong pipelines, Viehbacher’s ideas could help keep pharmaceutical companies healthy without unduly reducing patients’ options by stifling competition from generic drugs. For the sake of consumers and the drug industry as a whole, let’s wish him success.