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How Drug Companies Get Around Patent Law

The U.S. Food and Drug Administration and the Patent Trademark Office have set a 20-year limit on drug patents. On average, however, the exclusivity period of brand-name products — the time between actual market launch and the patent’s expiration— is about 12 years. But there are 3 ways around this:

  1. Brand-name companies can get multiple patents for different parts of the drugs and prevent it from going generic for up to 30 years.
  2. Brand-name companies can use court action to delay approval of generics by up to two and a half years after a patent expires.
  3. Brand-name companies can pay generic companies millions of dollars to hold off – a type of illegal price collusion, which the Federal Trade Commission has documented:
    • In one case, a brand-name company paid a generic company $4.5 million a month to delay competing for six months—during which time the brand was expected to generate $185 million in sales.
    • In another case, a brand-name company paid $60 million to one generic manufacturer and $30 million to another to delay their versions of its drug.
    • The FTC has accused Cephalon of paying 4 generics manufacturers $200 million to stop selling their versions of the narcolepsy drug Provigil until 2012. Why? With $800 million in annual sales, Provigil accounts for about half of Cephalon’s revenues.