SOURCE: Cutting Edge Information

Cutting Edge Information

November 13, 2014 05:02 ET

Pharma Companies Maximize Market Share Through Pay for Delay Deals

18% of Surveyed Drug Companies Employ Pay for Delay Tactics, Finds Cutting Edge Information

RESEARCH TRIANGLE PARK, NC--(Marketwired - November 13, 2014) - A study of more than two-dozen large and small pharmaceutical companies found that 18% have used pay-for-delay tactics as part of their counter-generics strategies. Most of the companies actively employing the strategy, however, are smaller drug manufacturers.

The data in the study, "Post-Patent Generic and Biosimilar Defense: Harnessing Competitive Tactics to Mitigate Revenue Erosion," found that only 18% of drug manufacturers currently use pay for delay tactics. Most surveyed companies reporting this strategy's use are small pharmas. Small companies comprise almost all of those reporting that they plan to use pay for delay deals in the next three years as well.

"The large percentage of surveyed companies report that they do not use this strategy may be misleading, however," said Jacob Presson, research analyst at Cutting Edge Information. "Surveyed companies considering this option's use in the next three years may have been swayed to not report it as a certainty due to current public opinion -- making this strategy seem less employed than it truly might be. Again, this may decrease due to FTC v. Actavis' final ruling that such agreements can, in fact, be considered anticompetitive."

Pay for delay tactics, or reverse payment schemes, offer branded companies an opportunity to maintain market exclusivity in return for a payment to a challenging generic company. After a generic company files a Paragraph IV certification, a branded company may opt to pay the company to stay off the market instead of risk defending its patent in court.

Critics of pay for delay arrangements argue that the deals violate antitrust laws and cost the American consumer billions of dollars in drug costs. The FTC is a strong critic of reverse payment deals, alleging the deals violate anticompetitive laws. In the US Supreme Court case FTC v. Actavis, Inc., the Supreme Court ruled 5-3 in June 2013 that such deals can be considered anticompetitive. However, these deals must be gauged on a case-by-case basis by lower courts using the "rule of reason."

The study, "Post-Patent Generic and Biosimilar Defense: Harnessing Competitive Tactics to Mitigate Revenue Erosion," (http://www.cuttingedgeinfo.com/research/portfolio-management/counter-generics/) profiles more than 15 counter-generics strategies, team structures and staffing, and includes 39 case studies of companies' approaches to combating generics.

Use this report to:

  • Plan for and implement a diverse and robust set of lifecycle management strategies.
  • Build a strong counter-generics task force early.
  • Prepare for emerging biosimilar competition and changing approval pathways.

For more information about counter-generics and biosimilars defense tactics, contact Elio Evangelista at 919-403-6583.

Contact Information

  • CONTACT
    Elio Evangelista
    919-403-6583