FTC: 'Pay-for-delay' settlements up 60 percent

The number of so-called "pay for delay" settlements in patent disputes over prescription drugs increased by 60 percent in 2010, the Federal Trade Commission said in a report Tuesday.

The FTC has pressed Congress to outlaw the settlements, which it believes are anticompetitive. A ban was proposed during the healthcare reform debate but didn't make it into the final bill.

The FTC says "pay-for-delay" settlements cost consumers and the government more than $3 billion per year in higher drug costs. The term refers to cases in which a brand-name drug maker sues a would-be generic competitor for patent infringement, then the parties reach a settlement in which the brand pays the generic and the generic agrees to stay off the market for a certain period of time.

“The FTC is continuing to perpetuate the myth that pro-competitive, pro-consumer patent settlements are harmful to consumers — an unsubstantiated position that has repeatedly failed to receive support in both Congress and the Courts," the Generic Pharmaceutical Association said in a statement.

Both brand-name and generic manufacturers oppose new limits on their patent settlements.