Drugmakers win, consumers lose. That’s the message from the Federal Trade Commission, which released its latest annual report on the deals between brand-name and generic drugmakers.

In fiscal year 2007, which ended September 30, 2007, there were 33 final settlements. Of those, 14, or 42 percent, included both compensation to the generic company and a restriction on the generic’s ability to market its product. Of those 14 settlements, 79 percent involved agreements with first-filer generic makers.

Unlike the previous fiscal year, most of the agreements involving restrictions on generic entry did not include a side deal involving elements not directly related to the resolution of the patent dispute. Instead, the majority involved compensation to the generic firm through an agreement by the branded firm not to sponsor or compete with an authorized generic product for some period of time.

“As our report today sadly demonstrates, pay-for-delay settlements continue to proliferate. That’s good news for the pharmaceutical industry, which will make windfall profits on these deals. But it’s bad news for consumers, who will be left footing the bill,” says FTC commish Jon Leibowitz, in a statement. “These agreements inflict special pain on the working poor and the elderly, who need effective drugs at affordable prices.”

The FTC has argued vociferously against these so-called reverse settlements, but with little to show for it. You may recall that two appeals courts ruled in 2005 that deals struck by Schering-Plough and AstraZeneca with generic rivals were legal.

In the 14 final settlement agreements in fiscal year 2007 that involved both a restriction on generic entry and compensation to the generic maker, the FTC reports compensation took two forms: In 11 of the final settlements, the brand-name drugmaker agreed not to launch or sponsor an authorized generic for some period of time after the entry of the generic rival’s product; and in three of the final settlements, the compensation flowed to the generic maker in the form of a side deal.

In six of the 14 agreements, both the brand-name and generic drugmakers received compensation. In three of these six deals, brand-name drugmakers received a royalty in exchange for granting a generic rival a license to the patent at issue in three cases. In one case, the brand-name drugmaker received a royalty payment on the generic maker’s sales of an authorized generic product, the agency reports.

In another case, the brand-name drugmaker received a royalty on the generic rival’s sales of a particular dosage of the drug at issue in the litigation. And in the final case, the brand-name drugmaker could receive a percentage of the generic maker’s sales of the drugs at issue in the litigation, as well as of some unrelated products, according to the FTC.

The FTC did not name any companies in its report, but a recent example involves Cephalon, which the FTC accused three months ago of illegally blocking generic competition to its Provigil drug for sleep disorders. The drugmaker was charged by the FTC with paying $200 million to four generic rivals in 2005 and 2006. Cephalon argues the deals were valid ways of resolving patent litigation.