When "name brand" pharmaceutical drugs lose their patent protection, generic companies can make the same chemical without paying a fee or being sued. In order to lessen the economic loss from losing patent protection, pharmaceutical companies in many situations pay a settlement to a competitor to hold off on bringing a generic version of their drug onto the market for a few months. It's a form of settlement in patent litigation that can actually be pretty advantageous for both parties.

The big pharmaceutical company with a blockbuster drug gets to have the only product on the market for a little longer. It also does not have to deal with price competition. The FDA estimates that generics usually cost 80 to 85 percent less than brand-name drugs--not great news for the maker of the brand-name medication.

As for the generic drug maker, it has to hold off on coming into a given market--but it also gets a settlement from a pharmaceutical, often in the millions. Is this practice ethical?