Inventor: Solvay Pharmaceuticals
Invention: Androgel (synthetic testosterone gel)

For aspiring inventors, the path in front of them to fame is pretty clear. First you think of an idea, then you build a prototype, file a patent, and do a lot of marketing. If you are lucky, you will end up with a good licensing deal. The company which licenses your invention, pays you for the patent. How about if you get paid for not filing a patent? Well, that is what happened in the case of Androgel.

Testosterone, as everyone knows, is an anabolic steroid. Androgel is a synthetic testosterone gel. Doctors usually prescribe it to old people, cancer patients and HIV patients, who have low levels of the hormone. It was invented by Belgian drugmaker Solvay Pharmaceuticals. The company was granted a seventeen year patent for Androgel in 2003. Since then, Androgel has become a blockbuster drug for them – it is their second highest grossing drug, earning about $400 million in annual sales.

Whenever there is success, competitors appear very soon. In this case also, it happened. Other drugmakers like Watson Pharmaceuticals, Par Pharmaceuticals and Paddock Laboratories applied to manufacture a generic version of Androgel, and challenged Solvay’s patent. US FDA granted approval for this as well.

Now, a bit of information here: brand name drugs typically cost a lot. This is because they do a lot of research before developing a drug, and file patents to protect it. However, generic drugs, on the other hand, are usually much cheaper. A generic drug is a copy that is the same as a brand-name drug in dosage, safety, strength, how it is taken, quality, performance and intended use. You can safely infer that the only difference is the cost.

So, what this meant was that other companies could manufacture a much cheaper synthetic testosterone gel, and pummel the market share of Androgel. Solvay pharmaceuticals immediately made a deal with those potential competitors – they essentially said, we will pay you for doing nothing. Solvay agreed to pay a share of their profits in return for not marketing a generic version until 2010. This type of deal is known as a “reverse deal”. What does it do? As in this case, it pays companies for doing nothing. As far as the patient is concerned, a drug which should only cost $5 will cost almost $50. So, in essence, the loser here, is the drug user/patient.

This time around though, FTC (Federal Trade Commission) decided that enough is enough. They filed suit in the federal court in an attempt to block this deal. “We want to stop these unconscionable pay-for-delay deals that force consumers to overpay for much-needed drugs,” said Jon Leibowitz, an FTC commissioner. FTC was joined by the state of California as a complainant later. They said the “pay-for-delay” agreement violates antitrust laws, robs consumers of less-expensive alternatives and allows the brand-name drugmaker an unfair monopoly.