The FTC published four reports on patent settlements and, for the first time, highlighted volume restrictions. Volume restrictions, which are increasingly common in patent litigation settlements, are another way branded pharmaceutical companies restrict competition.
A great case study of this is Celgene and Bristol Myers Squibb’s (BMS) settlement with generic companies for the cancer drug Revlimid. The primary patent on Revlimid expired in 2019. That should have opened the door for competitors to enter the market and drive down the price of branded Revlimid. But that didn’t happen because in 2022 Celgene/BMS coerced generic competitors into signing a settlement agreement that *severely limits* the volume of generic Revlimid they can sell until 2026.
To break it down, the generic drug companies that settled with Celgene/BMS were initially limited to selling no more than 7% of the total market starting in early 2022. Celgene/BMS’s volume restrictions eased slightly over the following years but remain in place until 2026. Only in January 2026 will competitors finally be able to sell generic Revlimid without restrictions imposed by Celgene/BMS.
This type of agreement is only possible because Celgene/BMS built a patent thicket around Revlimid. In her 2021 testimony before the Senate Judiciary Committee, Rachel Goode explained that it can cost a generic drug company as much as $1 million to challenge a single patent. Celgene/BMS has filed 206 patents on Revlimid, 117 of which have been granted. If generic competitors tried to enter the market without agreeing to Celgene/BMS’s settlement terms, the drug company could easily tie them up in litigation for years, forcing them to spend millions of dollars in legal fees.
Industry defenders and the US Patent and Trademark Office (USPTO) claim that Revlimid had 16 years of market exclusivity. This is a distortion of the facts. By the end, BMS will effectively have enjoyed 20 years of market exclusivity on Revlimid.
Read reporting from STAT’s Ed Silverman to learn more about the FTC’s concerns around volume restrictions.