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Raising Blood Pressure For Profits

Federal regulators charged pharmaceutical giant Schering-Plough Corp. and two generic manufacturers with conspiring to keep a generic version of a Schering high blood pressure drug off the market, costing consumers $100 million.

This is the third time in 13 months that the Federal Trade Commission has brought such charges against a major pharmaceutical company and generic manufacturers.

Separately Monday, the FTC settled its case against Aventis Pharmaceutical Inc., Carderm LP, and Andrex Corp., which alleged the three companies were conspiring to keep a generic form of Cardizem CD, a treatment for hypertension and angina, to the market.

Without admitting wrong doing, the companies agreed that they would not engage in anti-competitive agreements.

In the latest case, the FTC alleges that Schering illegally paid Upsher-Smith Laboratories and ESI Lederle Inc., a division of American Home Products, to keep a generic version of K-Dur 20, a potassium chloride supplement used to treat people with high blood pressure, off the market. K-Dur 20 sales totaled $287 million last year.

Schering, Upsher-Smith and ESI Lederle denied the charges.

"We will vigorously challenge any action by the FTC," says Schering spokesman William O'Donnell. "We believe our agreements were lawful and proper."

Schering's patent doesn't expire until 2006. However, in August 1995 Upsher-Smith sought FDA approval to manufacture and distribute a generic version of K-Dur 20. The Hatch-Waxman Act allows generic firms to bring products to market before a patent expires if it can prove the patent is invalid or the generic doesn't infringe on the patent. Schering's patent is for the coating on the medicine, not the active ingredient and generally such patents are easier to challenge.

Schering sued Upsher for patent infringement, which served to stay any FDA approval of Upsher's application. The two companies settled their suit in 1997, and Upsher agreed not to sell any generic version of K-Dur 20 until September 2001. At the same time, Schering agreed to license five drugs from Upsher for $60 million. According to the FTC, the licensing agreement was a cover for what was actually a payment to stay out of the market.

In a statement, Upsher-Smith said the deal for its five drugs was fair, and that Schering didn't overpay. In fact, it says just one of the drugs included in the deal is worth more than $60 million. The company said "We stand by our pro-competitive settlement agreement which enables us to bring another affordable alternative for K-Dur to market on a date certain nearly five years prior to its patent expiration - and much earlier than hd we continued risky and protracted litigation."

ESI filed an FDA application to market a generic version K-Dur 20 in December 1995, and Schering sued for patent infringement. The two settled the case in June 1998 with ESI promising not to market any generic versioo kf K-Dur 20 until January 2004. At the same time, Schering agreed to license two of ESI's drugs for $15 million. Again, the FTC charges the payments were made to secure ESI's agreement to delay entry to the market.

American Home Products spokesman Lowell Weiner said the settlement was "pro-consumer" because it allows the ESI product to enter the market before K-Dur 20's patent expires. "We had a less than 50 percent chance of winning the lawsuit so this outcome was good for consumers," says Mr. Weiner.

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