Florida Court Settlement Against Shire Pharma. Following three years of contentious litigation, U.S. District Court Joan A. Lenard approved a nearly $15 million settlement that had been reached in April, 2016, calling it fair, reasonable and adequate. The Florida Judge ended the consumer class action that had accused Shire U.S., Inc. of paying rival pharmaceutical companies to delay selling less expensive generic versions of Adderall XR, its attention deficit drug.
A class action is a lawsuit that allows a large number of people with a common interest in a matter to sue or be sued as a group.
The settlement administrator has received over 23,450 claims requesting reimbursement for more than 855,000 prescriptions of the attention deficit hyperactivity disorder (ADHD) drug. During her ruling, Judge Lenard said, “It’s a very good response, from my experience.”
How Pay-for-Delay Works
The pattern of behavior alleged in the lawsuit against Shire relates to “pay-for-delay” settlements. These settlements let drug makers sidestep rival competition by offering patent settlements that pay other generic companies not to bring less expensive alternatives to market, in essence, blocking all other generic drug competition for branded drugs.
The Federal Trade Commission (FTC) has recently made pay-for-delay settlements a top priority. These anticompetitive deals cost the public and taxpayers $3.5 billion in higher drug costs every year, according to an FTC study. Lawsuits such as the Adderall XR suit help protect consumers, and hinder pharmaceutical companies from taking part in such agreements to delay generic product entry in the future.
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FTC’s Opposition to Pay-for-Delay
The FTC has been actively opposing the costly legal tactic that an increasing number of branded drug manufacturers have been using to stifle competition from lower-cost generic medicines. These drug manufacturers have been able to sidestep competition by offering patent settlements that pay generic companies not to release lower-cost alternative medicines to market.
These pay-for-delay patent settlements successfully block all other generic drug competition for an increasing number of branded drugs. The FTC has filed numerous lawsuits to stop these deals since 2001. It supports legislation to put an end to pay-for-delay settlements, according to the FTC website.
In 2014, to ensure competition in the nation’s healthcare markets, the FTC filed a complaint in federal district court charging a number of major pharmaceutical companies with illegally blocking American consumers’ access to lower-cost versions of the blockbuster drug AndroGel.
The FTC’s complaint alleged that AbbVie Inc., and its partner Besins Healthcare Inc., filed baseless patent infringement lawsuits against potential generic competitors to delay bringing lower-priced versions of the testosterone replacement drug AndroGel. While the lawsuits were pending, AbbVie then entered into an anticompetitive pay-for-delay settlement agreement with Teva Pharmaceuticals USA, Inc., to further delay generic drug competition.
“The FTC is acting today to stop anticompetitive conduct by AbbVie, Besins Healthcare and Teva which has forced consumers to overpay hundreds of millions for the drug AndroGel,” said FTC Chairwoman Edith Ramirez. “This action also reinforces the Commission’s longstanding commitment to protect American consumers from collusive arrangements between branded and generic pharmaceutical companies that inflate the prices of prescription drugs and harm competition.”
The FTC sought a court judgment declaring that the defendants’ conduct violated the FTC Act, ordering the companies to return their ill-gotten gains, and permanently barring them from engaging in similar anticompetitive behavior in the future. The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.
U.S. PIRG Researches Pay-for-Delay
Too often, consumers have to shoulder a heavy financial burden, or even go without needed medication due to the high cost of brand-name drugs, according to U.S. PIRG (Public Interest Research Group). The group’s research shows that one significant cause is the practice of pay-for-delay, which inflates the drug prices paid by millions of Americans. When a brand-name drug company pays off a would-be competitor in a pay-for-delay deal, it delays it from selling a generic version of the drug. Without any competition, the brand-name company can keep demanding high prices for its drug.
Annual reports by the FTC indicate that generic versions of as many as 142 brand-name drugs have been delayed by pay-for-delay arrangements between drug manufacturers since 2005.
Because details of these deals rarely become public, consumers have largely been kept in the dark about the extent of the problem.
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