The US Federal Trade Commission (FTC) has filed an antitrust lawsuit against pharmaceutical company Endo International. The suit, filed in March, alleges that Endo manipulated market competition by paying to delay the release of generic versions of Endo’s brand-name drugs.
Endo’s global headquarters is in Dublin, Ireland, with an additional US headquarters located in Malvern, PA. Its subsidiaries include Endo Pharmaceuticals which makes a variety of brand-name drugs including opioid painkillers Percocet and Opana ER, as well as Lidoderm,a local anesthetic.
Pay-For-Delay Agreements With Generics Manufacturers
The FTC’s antitrust lawsuit alleges that Endo engaged in “pay-for-delay” agreements for Opana ER and Lidoderm with generic drug makers Impax Laboratories and Watson Laboratories, respectively.
Pay-for-delay deals are usually put into place when a brand-name drug’s patent is about to expire. Generic drug manufacturing companies drop patent challenges and delay releasing their drugs in exchange for cold, hard cash from the brand’s patent holder.
These pay-for-delay deals result in a monopoly on first the brand-name drug and then on its generic version as the patent expires.
Consumers Pay $3.5 Billion Annually in Pharma Profits
These lucrative pay-for-delay agreements benefit both Endo and the companies who formulate generic versions of its drugs. Although both companies may win, consumers lose because lack of competition keeps drug costs high. The FTC estimates that pay-for-delay agreements cost taxpayers $3.5 billion per year.
FTC Fights Monopolistic Pharma Practices
These types of deals are strictly legal as long as generic drugs hit the market at the time of patent expiration. However, thanks to a 2013 US Supreme Court ruling, the FTC can file an antitrust lawsuit against the companies involved for contributing to heightened drug costs for consumers.
The FTC’s antitrust lawsuit against Endo involves hundreds of millions of dollars the pharma company paid to Watson and Impax in 2010 and 2012, saying:
“Endo knew that generic competition would decimate its sales … and that any delay in generic competition would be highly profitable for Endo, but very costly for consumers.”
Just last year, Endo’s stock peaked at an all-time high of $96.46 on April 10, 2015, before beginning a long slide. Today its stock is worth only $27.00 – a loss of 72% of its value. Endo’s stock value may decline even more if the antitrust lawsuit results in hefty fines.
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