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Haunted: Teva’s $1.2 billion ‘pay-for-delay’ penalty; which companies will get hit next?
Teva Pharmaceutical Industries, Ltd., which acquired Cephalon in 2012, will make a total payment of $1.2 billion as part of a ‘pay-for-delay’ settlement reached with the Federal Trade Commission (FTC) last week.  What exactly did Cephalon, for which Teva paid $6.8 billion, do so wrong? Isn’t ‘pay-for-delay’ common practice in the pharmaceutical industry?   First of all what is a pay-for-delay? ‘Pay for delay’ or reverse payment patent settlements, are agreements where the brand name drug manufacturer compensates generics, not to market the generic product for a specific period of time.  These settlements allow the brand manufacturers to extend their patent monopolies and according to an FTC study, these deals cost consumers and taxpayers $3.5 billion in higher drug costs every year.   What exactly happens and why is it a big deal now? Cephalon allegedly paid four generic drug companies (Teva, Ranbaxy Pharmaceuticals, Mylan Pharmaceuticals, and Barr Laboratories), over $300 million in total. In return the generics agreed to drop their patent challenges and forgo marketing of their generic versions of Cephalon’s blockbuster sleep-disorder drug Provigil, for six years, until April 2012.  An extended monopoly for Provigil, in the absence of generic competition, was “$4 billion in sales that no one expected”, the CEO of Cephalon reportedly said when the deal was struck.  While in Europe, regulators have been going after pay-for-delay cases for years, it was only as recently as 2013, in FTC v. Actavis, that the U.S. Supreme Court made clear that reverse payment patent settlements are subject to the same antitrust rules that govern general U.S. business conduct. The payment made by Teva will compensate purchasers, including drug wholesalers, pharmacies, and insurers, who overpaid because of Cephalon’s illegal conduct, is the first positive outcome for the FTC after the Supreme Court ruling.   How common are ‘pay-for-delay’ settlements? Based on data provided by the FTC, for the past few years, more than 100 settlements are reached annually between brand and generic pharmaceutical companies. Over 30% of these settlements have the potential of being ‘pay-for-delay’ agreements.   Table// Potential pay-for-delay settlements reached between brand and generic companies:   Financial Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Final Settlements: between brand and generic companies 14 11 28 33 66 68 113 156 140 145 Involving First Generic Filing 8 5 11 16 29 32 49 54 43 41 Potential Pay-for-Delay: Involving First Generic Filing 2 9 11 13 15 26 18 23 13 Settlements 3 14 14 16 19 31 28 40 29   How severe are the penalties for ‘pay-for-delay’ settlements in Europe?  The European Commission has fined Johnson & Johnson (J&J) just under 10.8 million euros and Novartis 5.49 million euros, after discovering a ‘pay-for-delay’ deal on the painkiller Duragesic (fentanyl). The amount pales in comparison to the whopping €428m fine on Servier and several other companies (Niche/ Unichem; Matrix, which is now part of Mylan; Teva; Krka and Lupin) for conspiring to delay generics of the widely-used blood pressure drug Coversyl/ Aceon (perindopril).   In yet another settlement, agreements which operated in 2002 and 2003 between the Danish originator Lundbeck, and other generic companies, resulted in Euro 146 million in fines.   What should we expect in the future? Based on an FTC presentation made in September 2014, they highlighted 19 Cases to Watch, which has them targeting almost every major brand and generic pharmaceutical company. However, with the complexities involved, this list is continuously evolving: The cases (by name of the brand product) Actos, Adderall, Aggrenox, AndroGel, Cipro, Effexor, K-Dur, Lamictal, Lidoderm, Lipitor, Loestrin, Nexium, Niaspan, Opana, Provigil, Skelaxin, Solodyn, Wellbutrin.The brand companies involvedAbbvie, Abbott, AstraZeneca, Bayer, Besins, Biovail, Boehringer, Cephalon, Endo, GlaxoSmithKline, King, Medicis, Pfizer, Shire, Schering, Takeda, Warner Chilcott, Wyeth.The generic companies Actavis , Barr, Duramed, Dr. Reddy’s, HMR, Impax, Lupin, Mutual, Mylan, Par, Perrigo, Ranbaxy, Rugby, Sandoz, Teva, Upsher Smith.   Our view: Pharmaceutical companies, lawyers and the FTC will be busy for the coming few years, since there are a series of suits, which will be challenging settlements reached between brand and generic pharmaceutical companies.  While patents provide temporary monopolies to promote innovation, brand drug manufacturers will need to resort to more innovative ways of sustaining their profits. Click here and learn about the different strategies adopted in the United States to block generics?  

Impressions: 3400

https://www.pharmacompass.com/radio-compass-blog/haunted-teva-s-1-2-billion-pay-for-delay-penalty-which-companies-will-get-hit-next

#Phispers by PHARMACOMPASS
04 Jun 2015
Pharma Chess: Strategies adopted in the United States to block generics
When a generic drug comes to the U.S. market, sales of brand drugs crash. The drop is more than 80% by the time a second- or third- generation generic arrives.For brand companies, used to high profits for years, the imminent generic threat leads to an aggressive search for ‘solutions’, and creative strategies to maximize returns from their products. What kind of blocking tactics are used to stop generic competition?In an attempt to delay generic competition, here are some of the commonly used approaches. 1/ Go legal:While a new drug patent is difficult to invent around, there are brand drugs with weak patents which may not withstand scrutiny. In such cases, the brand drug manufacturer files a patent infringement complaint with the FDA. The mere filing of the complaint triggers an automatic 30-month stay of FDA approval, as per the provisions of the Hatch-Waxman Act. Understanding the Hatch-Waxman Act:In 1984, a United States federal law was designed to encourage the manufacture of generic drugs by  pharmaceutical industry. The amendments of the Act protect the first generic (the ‘first-filer’) to challenge the brand’s patent, by mandating that the FDA not approve any additional generic competitors until 180 days, after the first-filer launches its product. 2/ Sample obstruction:Brands attempt to prevent generic firms from accessing samples of the brand drug necessary to perform equivalence studies. The reason provided is that the brand drug falls under restricted distribution, part of the FDA-mandated programs, known as Risk Evaluation and Mitigation Strategies (REMS). Brand firms also implement distribution restrictions for drugs that are not subject to REMS.3/ Destroy the product:Brand name pharmaceutical companies try to preserve the profits on a patented drug by making modest reformulations that offer little or no therapeutic advantages. This tactic is known as ‘product-switching’ or ‘product hopping’. In addition, prior to a generic launch, the brand drug simply withdraws its original product forcing patients to switch to the reformulated drug, so consumers don’t benefit from generic competition of the old version of the drug. Actavis’ ongoing Namenda litigation covers this example perfectly.4/ Change the rule of the game:In order to overcome the patents of the brand drugs, generic medicines are manufactured slightly differently, when compared with the brand product. Citizen petitions are filed with the FDA, at the behest of brand manufacturers, questioning the safety of the generic drug, due to the difference between the brand and generic products. A successful petition, changes the regulatory requirements, and makes it harder for generics to obtain FDA approval. The brand manufacturers were filing so many frivolous citizen petitions that the FDA has been denying them in record numbers. In the event, generic companies do manage to make significant inroads, and threaten the brand drug’s monopoly, there is a ‘pay-for-delay’ playbook. How does the ‘pay-for-delay’ game get played?Settlements are reached between brand and generic manufacturers in which the brand incentivizes the generic not to market their products. The incentives can involve any of the following options:- Cash payment made from the brand to the generic that claims to reimburse some or all of the generic’s litigation fees.- A side business deal between brand and generic manufacturers such as an agreement to buy active pharmaceutical ingredient (API) from the generic manufacturer, even though the brand has adequate supply of the API for their own needs (e.g. AstraZeneca, Ranbaxy’s Nexium deal).- Brand manufacturer promises not to market an Authorized Generic (AG) in competition with the generic manufacturer’s product for some period of time. AGs are pharmaceutical products, which are approved as brand-name drugs, but marketed as generic drugs. No authorized generics significantly reduce the competition for the generic player allowing them to secure greater market share and extract higher prices: e.g. GlaxoSmithKline (GSK) paid Teva Pharmaceuticals to delay entry by promising not to compete with authorized generic versions of the drug Lamictal.- Brand allows the generic to market an authorized generic of a different product: e.g. AbbVie’s Androgel case against Teva had Teva asking for supply of an authorized generic of TriCor, a cholesterol drug with 2011 sales of more than $1 billion. - Other forms of compensation are offered to the generic patent challenger. For example, an agreement containing a declining royalty structure in which, the intellectual property is licensed by the brand to the generic. Alternativelly, a co-development deal can be struck for a new drug. Our view:The battle between brands and generics will continue for time to come, and regardless of antitrust scrutiny, there will be a high degree of innovation in the strategies devised by brand firms to maximize profits. However, drug companies aren’t the only ones innovating. Hayman Capital wins our vote for the most innovative approach taken. The hedge fund’s “Dispute the patent, short the stock” formula is designed to try and make money regardless of the outcome. How exactly the healthcare system benefits from these different approaches is a completely different story!Click here and learn about the latest ‘pay-for-delay’ cases in Europe and America  

Impressions: 2717

https://www.pharmacompass.com/radio-compass-blog/pharma-chess-strategies-adopted-in-the-united-states-to-block-generics

#Phispers by PHARMACOMPASS
04 Jun 2015
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