Controversial pay-to-delay deals on the decline in the EU
- Pay-to-delay refers to a practice in which brand-name drug manufacturers and generic companies agree that the generic manufacturer will delay introduction of a copycat version of the branded product. The brand manufacturer pays the generics company off, which gives it more time to market its drug without competition. There is usually an agreement that the generic manufacturer will introduce a copycat version at some future date.
- Within the last several years, pay-to-delay deals between brand manufacturers and generic manufacturers had risen steeply, but all evidence from 2013 on shows a decreasing level of this behavior—behavior that is not only anti-competitive, but also costly to consumers.
- On average, there were an average of 24 pay-to-delay deals investigated each year during the period between 2000 and 2008; however, the high point was 2012 when there were a total of 180 pay-to-delay deals. In 2013, there were 146 pay-to-delay deals recorded.
Regulators in the EU and the US have become more aggressive about probing and fining companies engaging in pay-to-delay deals. Last year, Les Serviers and five generic competitors were fined $57- million for such behavior when they attempted to delay introduction of a generic blood pressure drug in lieu of a cash settlement.
On the other side of the Atlantic, the FDA has estimated that pay-to-delay deals cost consumers approximately $3.5 billion per year. While US regulators also investigate these types of deals, the pharmaceutical industry often pushes back making the point that there are many gray areas.