Last week, the Federal Trade Commission and the California attorney general filed suit in federal court [over the Solvay deal related to AndroGel], calling the deal illegal and anti-competitive. They said the companies had chosen to "collude rather than compete." The commission also noted that Solvay's "pay for delay" deal is far from unusual. Nearly half of all agreements between generics and brand-name manufacturers in 2006 and 2007 included payments in return for staying out of the market.
The FTC insists that such payments are illegal, but the law is not yet settled. The FTC has twice sought to persuade the Supreme Court to consider cases challenging pay-for-delay agreements, but both cases were turned away.
We agree with the commission that such deals are anti-competitive and bad for consumers. Sure, companies such as Solvay deserve patent protection (although Solvay long ago recouped its research-and-development costs). But society also has a strong interest in making sure that generic drugs become available as soon as legally appropriate. These competing interests must be weighed fairly and carefully, and a process is in place to do so under the Hatch-Waxman Act of 1984. At this point, there's little to be gained, at least for consumers, from backroom deals made by interested corporate parties.
However, one notes when it comes to hoodwinking California taxpayers, the LATimes and others are gung-ho on patent royalties.
On Hatch-Waxman, see also