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FTC says 'pay-for-delay' contracts between drug makers hurt consumers

[JURIST] Drug companies are harming consumers by using "pay-for-delay" legal agreements to keep cheaper generic prescription drugs off the market, according to a report [PDF text; press release] released Wednesday by the US Federal Trade Commission (FTC) [official website]. The report compares legal documents submitted to the FTC by drug manufacturers in fiscal year 2007 with those submitted since fiscal year 2004, finding an increasing use of "pay-for-delay" agreements between branded and generic drug manufacturers. AP has more.

"Pay-for-delay" agreements involve deals by which generic drug manufacturers seeking to market a generic version of a branded product are compensated by the branded drug manufacturer in return for delaying the entry of the generic product onto the open pharmaceutical market. In January, FTC Commissioner Jon Leibowitz [official profile] testified [transcript] before the Senate Judiciary Committee in support of Congressional legislation to ban the practice, saying that it may violate antitrust [JURIST news archive] law. In 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 [PDF text] which requires that certain legal agreements between branded and generic drug manufacturers executed after January 7, 2004 be submitted [FTC backgrounder, PDF] to the FTC for review within ten days of execution.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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