Senators Reintroduce Bill to Curb Pay-for-Delay Settlements

Last Friday, Senators Herb Kohl (D-WI) and Chuck Grassley (R-IA) reintroduced their "Preserve Access to Affordable Generics Act,” which would presume that pay-for-delay settlements were illegal and give the Federal Trade Commission (FTC) the power to block them. Under pay-for-delay agreements, the manufacturer of a branded medicine pays a generic-drug manufacturer to keep its version of the product off the market.

These agreements constitute an “anticonsumer practice,” said Sen. Kohl in a press release. Asserting that generic drugs save consumers and the federal government billions of dollars per year, Kohl added, “It is past time to put an end to these backroom deals and pass this bipartisan legislation.”

The Generic Pharmaceutical Association criticized Kohl’s bill when Congress considered it last year. In a 2010 press release, the association asserted that patent settlements create competition and save consumers, taxpayers, and the healthcare system money.

In January 2011, California Attorney General Kamala D. Harris and 31 other attorneys general filed a friend-of-the-court brief in a case before the US Supreme Court. The attorneys general urged the Court to review pay-for-delay agreements, which they called anticompetitive.

Stopping pay-for-delay agreements is a top competition priority for FTC, according to testimony that FTC Chairman Jon Leibowitz gave to a subcommittee of the US House of Representatives Committee on the Judiciary on July 27, 2010. The agreements cost consumers $3.5 billion a year, and stopping them would save the federal government $12 billion in prescription-drug costs over 10 years, according to FTC estimates.

In 2005, several court decisions permitted pay-for-delay settlements, which drug companies previously viewed as violating antitrust law. The agreements have since become common, and a record number of 19 pay-for-delay settlements were reached in 2009.

Sen. Kohl first introduced the “Preserve Access to Affordable Generics Act” in February 2009, and a compromise version passed the Judiciary Committee in October 2009. The act was included in the Financial Services And General Government Appropriations bill, which did not pass because the House and Senate failed to agree on an omnibus appropriations package in December 2010.

See related PharmTech articles:

EU Examines Patent Settlements (ePT)

Will the Vise Tighten on Pay-for-Delay Agreements? (blog post)

Senate Committee Passes Measures Restricting Patent Settlements (ePT)