updated 5/25/2006 7:58:00 PM ET 2006-05-25T23:58:00

The marketers of the world's second-largest selling drug dodged a major threat to their revenues two months ago by reaching a deal to keep a generic competitor at bay until at least 2011.

Now, 10 lawsuits have been filed over the settlement Sanofi-Aventis SA and Bristol-Myers Squibb Co reached with Apotex Inc., a generic manufacturer challenging blood thinner Plavix's patent. The suits, filed by businesses, unions and health plans, allege the deal violates antitrust laws by denying access to cheap, generic versions of Plavix.

"We want to have a high level of (health) benefits for our members but to do that we need access to cheap, generic drugs," said Wendell W. Young IV, president of United Food and Commercial Workers Union Local 1776.

Experts say drug makers are delaying the introduction of cheaper rivals with deals like the Plavix settlement, in which Apotex agreed to drop its patent challenge and launch its product at a time approved by the patent holders in exchange for a payment of at least $40 million.

Other tactics include filing petitions with the U.S. Food and Drug Administration that express concern about a generic version of one of their products, and arranging to manufacture an "authorized" generic to cut into the challenger's profits.

Evidence suggests such activities are becoming more common and regulators — fearing consumers' access to cheaper medications is being stalled by legal loopholes — are examining the issue.

The FDA is exploring ways to tell if some petitions are delay tactics. Meanwhile, the Federal Trade Commission announced in March it would study whether brand name manufacturers are muting competition by authorizing generic versions of their own drugs that coincide with the launch of a rival generic.

Generic drugs can be up to 60 percent cheaper than their brand name counterparts and a powerful weapon in the struggle against exploding health care costs. Drugs with combined sales of more than $48 billion will lose patent protection between 2006 and 2010, according to Medco Health Solutions Inc., a pharmacy benefit management company.

"Brand companies face a product drought so they are going after every possible tool to delay generic competition" said Kathleen Jaeger, president and CEO of the Generic Pharmaceutical Association, the industry trade group. "Any tool they use to delay approval of our products and delay consumers access to our (cheaper) products is problematic."

Still, some of these arrangements wouldn't be possible without cooperation from generic companies.

"The generic companies are complicit," said Alex Sugerman-Brozan, director of the Prescription Access Litigation Project, a nonprofit that sues drug companies for practices it alleges inflate drug prices and exaggerate benefits. But he said generic companies may feel forced into such arrangements because they offer a guaranteed financial benefit and they can't withstand the economic pressure from big drug companies.

Spokesmen for Bristol-Myers and Sanofi-Aventis declined comment on the lawsuits. Apotex didn't return a call.

While not commenting on the case directly, Ken Johnson, spokesman for the Pharmaceutical Research and Manufacturers of America, said in a statement that resolving litigation allows companies to focus on developing new medicines.

When the Apotex deal was announced, Sanofi and Bristol-Myers said they believed the Plavix patent was valid but didn't want to risk the trial, slated to start in June. Both companies said there is a possibility the deal won't obtain FTC clearance.

Plavix's revenues totaled $5.9 billion last year. It is Bristol-Myers' biggest seller, and Sanofi-Aventis' second largest-selling drug.

Consumers will have access to generic Plavix eight months before the patent's expires in 2011. But an Apotex victory could have resulted in a generic version years earlier.

In a speech last month, FTC Commissioner Jon Leibowitz said his staff would examine the deal closely and expressed concern about the mushrooming number of Plavix-like arrangements.

Leibowitz said that in fiscal 2004, none of the 14 reported agreements between brand and generic companies contained a payment to the generic company accompanied by it deferring its product's market entry. So far, for fiscal 2006, at least seven out of 10 agreements include a payment to the generic company from the brand company and a delay in the generic's debut.

Two appellate court decisions in 2005 upholding those types of deals appear to be affecting the market adversely, Leibowitz said. He added that the rising number of authorized generics may also temper generic firms' incentive to challenge patents.

Under federal law, the first generic company to file an application to market a drug that states that either it doesn't infringe on a patent, or that the patent is invalid, is eligible for a 180-day marketing exclusivity period. That's when generic companies recoup most of their investment because they only have to offer a slight discount to the brand.

However, the pharmaceutical company that owns the patent can either launch its own generic or give a license to another drug maker during that six month period, depriving the first filer its exclusivity.

An authorized generic can cut the profit of the first filer by 59 percent, said Gregory Gilbert, an analyst with Merrill Lynch.

"They (authorized generics) undermine the incentives for generic companies to try to enter early," said lawyer David Balto, an antitrust expert. "If a generic company knows a brand company can steal their market, they'd be more willing to settle."

Citizen petitions are another way to block generic entry into the market, Balto said. Anyone can file a citizen petition to express concern or comment about any issue facing the FDA, which can't approve a generic drug if there's an outstanding petition.

Balto said the cost of filing is small, compared to what a drug company can earn by impeding competition.

Last year, in a speech to the generic industry trade group, FDA Chief Counsel Sheldon Bradshaw said he'd seen examples of citizen petitions that appear aimed at delaying generic drug approval. An FDA spokeswoman said the agency couldn't be more specific about its attempts to prevent such scenarios.

A survey conducted by Merrill Lynch assessed citizen petitions were filed on 15 drugs that had not yet faced generic competition from 2000 to 2003. Since then petitions have been filed on 41 such products.

Earlier this year, the FDA denied petitions filed over generic Flonase, opening the way for a cheaper version of the popular allergy medicine. The debut was a long time in coming: Flonase's patent expired two years ago.

The reason for the delay is unclear, but Flonase's manufacturer, GlaxoSmithKline PLC, filed a Citizen Petition the month the drug's patent expired. Glaxo eventually filed an additional petition.

Glaxo spokeswoman MaryAnne Rhyne said the petitions weren't a ploy to delay generic competition. She said the FDA had failed to clarify guidelines for approving generic nasal sprays, and Glaxo wanted to insure the product would meet safety standards.

Glaxo sued the FDA after it denied the petitions but the case was thrown out of court.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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