Mylan COO Testifies on Pay-to-Delay Patent Settlements

The chief operating officer (COO) of Mylan (Canonsburg, PA), one of the world’s leading generic drug manufacturers, has condemned the launch of authorized generic drugs during 180-day exclusivity periods. The US House of Representatives’s Judiciary Subcommittee on Courts and Competition Policy called Mylan’s COO, Heather Bresch, to testify as part of a hearing on June 3, 2009, to gather information about the effects of so-called “pay-to-delay” patent settlements, which may delay market entry of generic drugs.

"When it comes to settlements, Congress need look no further than the use and abuse of authorized generics by brand manufacturers," said Bresch in her testimony. "The increase in the number of patent litigation settlements in recent years is directly related to the increased use of authorized generics during the 180-day market exclusivity period. This tactic upsets the natural balance of incentives that Congress intended with its 1984 Hatch–Waxman legislation."

Bresch explained that Mylan is not opposed to authorized generic drugs. Rather, the problem, she testified, lies in the marketing of these products during the 180 days of exclusivity. "In December 2003, in a Pink Sheet article, Eli Lilly CEO Sidney Laurel was quoted saying that systematically launching authorized generics each time a patent expires would mean the brand industry could ‘truly eliminate the incentive in the calculation that generic companies would make,’” said Bresch.

She also quoted J.P. Garner, former CEO of GlaxoSmithKline (London), as saying in a February 2004 earning conference: "The idea was somebody has a 6-month exclusivity, but we are a king maker; we can make a generic company compete during [the 180-day exclusivity]."

Bresch concluded her testimony by calling for a prohibition on authorized generics during the 180-day exclusivity period to establish a "level playing field" for generic companies as they contemplate settlement with a brand company in patent litigation, which would allow the generic company to view settlement options without the looming threat of an authorized generic.

See also the Federal Trade Commission’s testimony on this topic.

Stephanie Sutton is an assistant editor at Pharmaceutical Technology Europe.