by Merlin Hernandez

One of the issues that I find fascinating is the curious dance between brand name drug manufacturers and generics. The Hatch-Waxman Act under the Food, Drug and Cosmetic Act (FFDCA) has created a climate where brand name drug producers can make “reverse payments” to generic manufacturers to delay market entry for two and a half years in a nice little arrangement where everyone but the consumer seems to get their little piece of the pie. This could be seen as a way for brand name producers to fully recover their R&D costs, and achieve reasonable gains on their investments before generic brands, which have piggy-backed on new product innovations through reverse engineering, are allowed to cut into profit margins. It may be a primary corporate obligation for brand name manufacturers to circumvent generic market entry in any legal way they can.

On the other hand, the Sherman Antitrust Act outlaws the joining of commercial interests to form monopolies that can undermine competition and free market forces – the law is meant to prevent contrived monopolies and forestall restrictions to trade and supply, and protect the public from unfair practices like price-fixing. The Federal Trade Commission (FTC) has been waging an on-going battle to challenge Hatch-Waxman patent litigation settlements as a per se antitrust violation and has not yet been able to prevail in its quest to eliminate reverse payments in ANDA litigation. Caught in the middle of this legal soup is the consumer who must pay exorbitant prices for vital medicines. Thank you, Canada!

The Courts have ruled that “any anti-competitive effects fall within the ambit of the patent exclusionary right” Ethical questions arise when we examine who the beneficiaries are to the cozy “sweetheart deals” between brand name and generic companies – the former protect their profits, and the latter gets their cut. The real question may be which estate has been given the mandate to protect the public interest? Is it business or government?

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