Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Senator Klobuchar continues push for legislation targeting “pay-for-delay” agreements, (Jul 12, 2013)

By Jeffrey May, J.D.

Senator Amy Klobuchar (D-Minnesota), chair of the Senate Judiciary Committee’s Antitrust Subcommittee, has once again called for action on legislation aimed at so-called “pay-for-delay” agreements or “reverse-payment” agreements between brand name and generic drug companies that delay entry of low-cost generic competition. The senator's latest plea comes in response to a new report from Community Catalyst and U.S. Public Interest Research Group (U.S. PIRG), showing that people with cancer, heart disease, epilepsy, and other conditions have been forced to pay an average of 10 times more than necessary for at least 20 critical drugs due to pay-for-delay agreements between brand and generic drug companies.

In a statement released yesterday, Klobuchar said that it was “simply outrageous that consumers are forced to pay higher prices for critical drugs because of these backroom pay-off deals.” She said that the proposed “Preserve Access to Affordable Generics Act” (S. 214), which she introduced along with Senator Chuck Grassley (R-Iowa), the Judiciary Committee’s ranking member, in February, “would help put an end to the practice of brand-name drug manufacturers using pay-off agreements to keep cheaper generic equivalents off the market and help make sure consumers have access to cost-saving generic drugs they need.” Klobuchar also reiterated plans for the antitrust subcommittee to hold a hearing to examine these deals and her legislation to put a stop to them.

Under the proposed Preserve Access to Affordable Generics Act, agreements under which brand-name drug companies compensate generic drug companies to delay the entry of generic drugs to the market, a practice known as an “exclusion payment settlement,” would be presumed illegal. The FTC would have the authority to challenge such an agreement as a violation of Sec. 5 of the FTC Act, and the drug companies would have an opportunity to convince a judge why the agreement was not anticompetitive. If an agreement is found illegal, the FTC could assess civil penalties up to three times the profits gained by the drug companies.

Klobuchar said that the U.S. Supreme Court's recent decision in FTC v. Actavis, Inc. “was a step in the right direction.” That decision opened these types of agreements to antitrust challenge. However, she believes that “legislation is needed to put an end to these harmful pay-for-delay agreements once and for all.”

News: Antitrust