Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Senators Grassley, Klobuchar to Reintroduce Legislation Restricting Pharmaceutical Pay-for-Delay Deals, (Jan 18, 2013)

By Tobias J. Gillett, J.D., LLM.

Senators Chuck Grassley (R, Iowa) and Amy Klobuchar (D, Minnesota) have responded to yesterday’s FTC report, which found a sharp increase in “pay-for-delay” settlements between pharmaceutical companies, by announcing their intention to reintroduce legislation that would prohibit those agreements. In a “pay-for-delay” agreement, a patent dispute settlement contains a payment from the manufacturer of a brand-name pharmaceutical to a potential manufacturer of a generic equivalent in exchange for the generic manufacturer’s promise to postpone introducing the generic drug.

The FTC’s report, which summarized data on patent settlements filed with the FTC and the Department of Justice during Fiscal Year (FY) 2012 under the Medicare Modernization Act of 2003, had revealed an increase in such settlements from 28 in FY 2011 to 40 in FY 2012.

The FTC and Senators Grassley and Klobuchar have argued that the agreements increase the cost of pharmaceuticals to consumers by keeping lower-cost generic substitutes off the market for a longer period than patent settlements without payments.

In 2010, Senators Grassley and Klobuchar introduced the Preserve Access to Affordable Generics Act, a bill that would have made “pay-for-delay” settlement agreements illegal. The Senators plan to reintroduce the bill during this Congress.

“Drug manufacturers are using pay-off agreements to keep cheaper generic drugs off the market while raking in huge profits, and it has to stop,” said Senator Klobuchar. “I have long supported efforts to prevent this anti-consumer practice and this new report highlights the need for legislation to help make sure people have access to the drugs they need at a price they can afford.”

“These anti-competitive patent settlements between brand and generic drug companies only serve to keep the price of prescription drugs high and reduce consumer choice,” Senator Grassley said. “While the Supreme Court will consider a case this year on these deals, Senator Klobuchar and I will continue to press for a legislative remedy to put consumers first.”

The Generic Pharmaceutical Association (GPhA), a trade association of generic pharmaceutical manufacturers and distributors, did not share the same sentiments. In a statement released yesterday, the GPhA expressed its opposition to the FTC’s conclusions.

“The FTC is wrong on the facts, wrong on the public policy and wrong on the law,” said Ralph G. Neas, President and CEO of the GPhA. “Despite claims to the contrary, settlements actually help bring affordable generic medicines to market sooner, to the benefit of consumers and the health care system.”

News: Antitrust