In quick summary, here's what happens in a typical case:
- A lucrative brand name drug is about to go off patent. Typically, however, the company has a number of subsidiary patents on things like coating, etc. that have little to do with the actual active drug ingredient.
- A generic company bids to come onto the market with the drug--by the Hatch-Waxman Act, the first company to do so gets a plum in the form of 6-month generic exclusivity, during which it can charge almost as much as the brand name price due to lack of competition from other generic makers.
- The brand name company sues the generic company for patent infringement, often citing one or more of the subsidiary patents.
- A major and potentiallly protracted court battle ensues.
- The brand name company offers the generic a cash settlement, in effect paying them to drop their suit and take the cash, on the condition that they delay their product's marketing and preserve the brand name exclusivity for a longer period.
Kesselheim and colleagues make a number of good legal points and discuss some statutory fixes, most of which have little chance of passing the present Congress. But I think their most important argument is about the root cause of all this--silly patents. They propose two measures that could occur either at the Patent Office or at the FDA levels that would allow administrative challenges to minor patents that do not protect truly innovative drug development, leaving the courts free to decide the really tough cases, and industry free to patent and profit from real innovations. These reforms in my view should be the highest priority.
Kesselheim AS, Murtagh L, Mello MM. "Pay for delay" settlements of disputes over pharmaceutical patents. New England Journal of Medicine 365:1439-1445, Oct. 13, 2011.