Senators Propose Ban on Drug Pay-for-Delay Deals

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Sept. 14 — Sens. Amy J. Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) Sept. 9 reintroduced a bill (S. 2019) that would make drug company pay-for-delay settlements presumptively illegal.

The Preserve Access to Affordable Generics Act addresses the practice in which a patent-owning brand name drug manufacturer pays a generic maker to cease its patent validity challenge in court and stay out of the market until the patent expires or just before it expires.

“Pay-for-delay pharmaceutical deals force consumers to pay higher prices by keeping affordable alternatives to brand-name drugs off the market,” Klobuchar said. “Our legislation will help ensure people have access to the medications they need at a price they can afford by putting an end to these harmful agreements once and for all.”

The bill has been referred to the Senate Judiciary Committee for consideration.

Generic Drug Delay 

The senators said in a press release that pay-for-delay agreements delay generic entry into the market an average of nearly 17 months longer than agreements without payments.

“Pay for delay deals keep drug costs artificially high for consumers and the taxpaying public,” Grassley said. “These agreements disrupt the current law that was put in place to speed generic drugs getting to the market. In addition, they force consumers to pay more for their medicines, and add an exorbitant burden to the deficit.”

Klobuchar and Grassley reintroduced similar legislation in 2013. 

They also introduced the legislation (S. 27) in 2011. On July 21, 2011, the Senate Judiciary Committee approved the legislation, but it never made it to the full Senate for a vote.

On Sept. 10, Sen. Bernie Sanders (I-Vt.) introduced a wide-ranging prescription drug bill (S. 2023), which includes a ban on pay-for-delay settlements.

While the Generic Pharmaceutical Association didn't have any immediate response to the Klobuchar-Grassley bill Sept. 14, the group in 2013 sponsored a report finding that drug patent litigation settlements save consumers money, by bringing generics to market before a patent expires.

The question of whether pay-for-delay (also called reverse payment) settlements are illegal reached the U.S. Supreme Court. In a 2013 ruling, the high court said a “rule of reason” approach must be applied to determining whether reverse payment deals between branded and generic drug companies are anticompetitive but declined to hold that reverse payments are presumptively illegal.

The bill is at http://op.bna.com/hl.nsf/r?Open=bdmr-a2cncf.