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Pharma CEO: Why patent-holders cut deals with generics

Mike Precopio of Summit Labs, Collegeville, explains why drug companies cut deals with generic manufacturers, despite anti-competitive concerns

Re Sunday's PhillyDeals column ("Competition proposals could hit hard"):  Indeed, the big pharma deals with generics appear anti-competitive. However, the true anti-competitive threats facing innovator drug companies are:

1) The generics have no downside in challenging innovator patents. A few hundred thousand dollars in legal fees from the generic companies to go after proprietary drugs that do hundreds of millions of dollars in annual business is an excellent business risk.

2) The nature of pharma patent law is not "splitting the baby".  You either win or lose.  Innovator companies (and anyone involved in litigation) realize the legal system can be sometimes capricious and cannot risk millions in research costs and billions in revenue on even a small chance of a negative outcome. So they are forced to cut deals with generics in even very strong legal circumstances.

I wish I had an answer, but this is only one area in our legal system where 'reasonable' is in the eye of the beholder. We have courts of law, not necessarily justice.

Mike Precopio, President
Summers Laboratories, Inc.
Collegeville, PA