In a recent interview, Federal Trade Commission (FTC) Bureau of Competition chairwoman Deborah Feinstein announced that targeting pay-for-delay arrangements by pharmaceutical companies would continue as a top priority for the FTC.  Pay-for-delay deals arise when pharmaceutical companies marketing branded drugs pay a pharmaceutical company to enter into a patent settlement with manufactures of generic drugs.  Under the patent settlements, the branded pharmaceutical company pays a large fee to the generic pharmaceutical manufacturer in order to delay entry of the generic drug into the market.  The FTC views such deals as anticompetitive and harmful to consumers because they stifle competition by preventing a lower-cost alternative from entering the market.

Feinstein stated that in addition to two ongoing litigation matters challenging pay-for-delay arrangements, the FTC continues to vigilantly monitor fillings submitted under the Medicare Prescription Drug, Improvement and Modernization Act.  Likely, the FTC will open additional investigations into pay-for-delay deals.  Feinstein also commented that the FTC will proactively advance federal antitrust law and its policy toward pay-for-delay through amicus brief filings in private litigation matters.

Earlier this year, the Supreme Court ruled in FTC v. Activis, Inc. that pay-for-delay deals are subject to antitrust scrutiny and should be assessed under the rule of reason to balance the procompetitive benefits against the anticompetitive effects.  Additionally, the antitrust Subcommittee of the Senate Judiciary Committee has held hearings focusing on the anticompetitive effects of pay-for-delay arrangements.

Several senators, including Senators Al Franken (D-Minn.) and David Vitter (R-La.) have proposed legislation promoting pharmaceutical competition by offering alternatives to non-settling generic drug companies for challenging a patent and entering the drug market.  Effectively, this would permit some drug companies to circumvent market restrictions created by pay-for-delay deals.