Drug Companies Pay for Delay of Cheaper Generic Products
By Rachel Walden — December 10, 2009
Last week, TPMMuckraker ran a story by Zachary Roth, “Drug-Makers Paying Off Competitors To Keep Cheap Generics Off Market,” about the deals (sometimes called “reverse payment settlements” or “reverse settlements”) made between drug companies in order to keep generic drugs off the shelves after the original patents protecting the brand name drugs have expired.
As Roth explains:
When a generic drug is approved to come to market, the maker of the more expensive name-brand drug sues the generic for patent infringement. But instead of a conventional settlement, in which the generic pays the patent-holder to settle the claim that it infringed the patent, the payment goes the other way: the patent-holder pays the maker of the generic, in exchange for a pledge to delay bringing the generic to market.
As a result of these “pay-for-delay” deals, cheaper generic drugs are often kept off the market for a longer period than they otherwise would be.
While the TPM story doesn’t mention any drugs specific only to women’s health, Prescription Access Litigation provides at least one relevant example — a patent litigation/generic case from the late 1990s over the breast cancer drug Tamoxifen. The Centers for Disease Control and Prevention estimates that 46 percent of Americans used at least one prescription drug in the past month, so many consumers (male and female) are affected by drug prices on a regular basis.
There’s been little action in recent years on proposed legislation to prevent such deals. The “Protecting Consumer Access to Generic Drugs Act of 2009” — HR 1706 — was introduced earlier this year by Rep. Bobby Rush (D-Ill.), and so far, like similar bills introduced the past, it has not made it past the committee stage.
The House Subcommittee on Commerce, Trade and Consumer Protection held a hearing on the proposed legislation in March and apparently referred the bill on to the full Committee on Energy and Commerce, which does not seem to have considered it.
The Federal Trade Commission has also come out against the practice. FTC Chairman Jon Leibowitz said during a talk at the Center for American Progress in June that “American consumers would save $35 billion dollars over the next decade if these deals were banned.”
This past summer, the Department of Justice weighed in on one such case and concluded: “a settlement involving a payment to the alleged drug patent infringer in exchange for its agreement to withdraw its challenge to the patent and delay bringing its generic drug to market is presumptively unlawful and requires the defendant to offer justifications in order to avoid antitrust liability.”