In a follow up to a recent post on allegations of collusion between US drug companies and Indian pharma companies with regard to delaying the entry of generic drugs in the US market the US anti-competitive practices watch dog Federal Trade Commission has identified Ranbaxy amongst 4 other firms as being part of the ploy. It is alleged that these companies recieved in excess of $200 million to delay the entry of generic drugs into the US market till 2012 from the US firm Cephalon. The firms are Ranbaxy Teva, Mylan and Barr. The full article can be found here.
The Federal Trade Commission has sued the firm “unlawfully blocking sale of cheap generic versions of branded sleep-disorder drug Provigil.” This will prove to be a major commercial threat for the firm as Provigil comprises of more than 40% of Cephalon’s total sales.
“Today’s suit against Cephalon seeks to undo a course of anti-competitive conduct which is harming American consumers by depriving them of access to cheaper generic alternatives to an important branded drug,” said FTC Bureau of Competition Director Jeffrey Schmidt.
“Cephalon prevented competition to Provigil by agreeing to share its future monopoly profits with generic drug makers poised to enter the market in exchange for delayed generic entry. Such conduct is at the core of what the antitrust laws proscribe.”
The FTC is pushing for a permanent injunction allowing the entry of generic versions of Provigil as well as a declaration that Cephalon’s course of conduct (with regard to this agreement) violates Section 5(a) of the FTC Act and barring the company from engaging in such conduct in the future.
What the article ignores is the repercussions of entering into such an agreement for the generic drug manufacturers. Logically there should be a corollary to Section 5 (a) of the FTC Act which imposes some kind of liability on companies like Ranbaxy. Also maybe should India review generic drug manufacturer’s processes to see if any such agreements have been made in India. Considering the repercussions of this kind of agreement would be tragic in India we really should get a regulatory body to examine Ranbaxy (and similar companies) in India.
In conclusion I realize that this post reminds of me of something I’ve written about earlier. Which is that although generic drug manufacturers often indignantly claim to be on the side of the consumer sometimes you really have to wonder.
it was to another one of your posts that i wrote the following comment:
“to me it looks like running in circles.
Patent->monopoly and high price->generic enters/contemplates generic product->fluctuations in prices->talks of settlement between the parties -> back to monopolies
how are any of these things helping as instruments to promote public health or a mechanism to ensure affordable prices for drugs?”
– Business will allways find its way to profit. And it should. But that is where policy plays a role. And by simple business logic..the only subsitute for profit is some other profit, frm somewhere else(may be tax exemption for companies etc.).. Or may be a greater loss than the expected profit(may be something like Shamnad’s retaliatory mechanism or IP-Tax model could be useful)
It shall be interesting to see the efforts to strike a balance between ‘rights’ of all the different players in the game.
I am not sure if the author actually read the FTC press release, the complaint that the FTC filed or the dissent that Commissioner Leibowitz filed. The post seems to be mostly based on news reports. There are avoidable factual errors. Example: neither the complaint not the Business Standard story mention that Ranbaxy received $200 million. The FTC Press Release (http://www.ftc.gov/opa/2008/02/ceph.shtm) clearly says that “[T]he complaint charges that Cephalon was able to induce each of the generic companies to abandon its patent challenge and agree to refrain from selling a generic version of Provigil until 2012 by agreeing to pay the companies a total amount in excess of $200 million”. Para 61 of the complaint (http://www.ftc.gov/os/caselist/0610182/080213complaint.pdf)says that “Cephalon agreed to pay up tp $125 million in royalties…”. The total for Mylan and Barr is about $45 million each. Thus, Teva, Barr & Mylan alone account for $ 215 million, leaving not much for Ranbaxy, certainly not $200 million. While Mr. Kumar is absolutely entitled to his own opinions he is not entitled to his own facts. The instant gratification that blogoshere offers should not preclude fact based debate, especially in a forum like SpicyIP. Of course, the numbers may not change the gist of Mr. Kumar’s argument – which incidently is very much in agreement with what Commissioner Leibowitz has said – but that is not my point.
I’m sorry there seems to have been a typo. While trying to type out my post I’ve written Ranbaxy recieved more than $200 million. I meant the 4 companies mentioned have recieved in excess of $200 million. My post was based primarily on the business standard article and I had no intention of assuming facts. I apologize for the oversight.
I apologize for using the wrong gender to address Ms. Kumar. I had not seen her profile page. Now I have.
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Dear Anonymous,
Firstly, how does your rant about this supposed major fraud relate to the subject matter of the post–which is a settlement in a patent matter?
Secondly, even assuming your comment has some relevance to our discussion, what is the basis for your statements? Do you have any objective sources to which you can refer us? This seems a malicious outburst against Ranbaxy and it is difficult for me to buy your argument that you are a journalist. A journalistic take on this wouldnt come with this level of maliciousness.
Please respond soon and clarify. Else I have no option than to delete your comment. Whilst we strive to promote free and fair discussions here, comments that have no bearing on the subject matter of post and are malicious will not be tolerated.
Thank you.