The US Congressional Budget Office (CBO) now estimates that banning “pay-for-delay” deals between brand-name and generic drugmakers would reduce the federal deficit by $4.8 billion over 10 years; last year it said the measure would cut it by about $2.6 billion.
A new analysis of the Preserve Access to Affordable Generic Drugs Act (S 27) by the CBO – Congress’s financial watchdog – also estimates that earlier entry of generic drugs affected by the bill would reduce total pharmaceutical expenditures in the US by around $11 billion during the period from 2012 to 2021.
Under the bipartisan Act, which is co-sponsored by Democrat Herb Kohl and Republican Chuck Grassley, pay-for-delay deals – patent dispute settlement payments by brand-name companies to generic drugmakers in exchange for the promise of delaying the release of the generic version into the market – would be presumed illegal, and the Federal Trade Commission (FTC) would be provided with authority to stop such deals.
Commenting on the CBO’s new cost estimates, Sen Kohl said that “backroom pay-for-delay deals are keeping generic drugs off the shelves at a great cost to consumers and taxpayers,” and he called on Congress and the Joint Select Committee on Deficit Reduction (the so-called “Supercommittee”) to “take this opportunity to fix this problem.”
“When people across the country are having a hard time making ends meet, this could be a real boost to their bottom line,” added Sen Grassley.
The Senators have already urged the Supercommittee to include their bill as part of its budget-cutting effort. In a letter to the panel’s co-chairmen, Senator Patty Murray and Representative Jeb Hensarling, they emphasised that their legislation “would in no way” prevent drug patent settlements that do not contain pay-for-delay provisions.
A review of 100 settlement agreements by the FTC last year had found that 31 contained pay-for-delay provisions but that 81 did not. “This data suggests that these cases can be settled without resorting to a pay-for-delay agreement,” the Senators told the panel.
Also, the FTC recently released data showing that drug companies entered into 28 potential pay-for-delay deals in fiscal 2011, compared to the previous fiscal year’s record of 31 deals. Overall, the agreements reached in the latest fiscal year involved 25 different brand-name drugs with combined annual US sales of more than $9 billion.
Both the brand-name and generic drug industries oppose a ban on such settlements, and the Generic Pharmaceutical industry Association (GPhA) says that the CBO’s newly-revised score is “just the latest in a long line of faulty estimates on this legislation.”
“The ever-changing cost savings estimates on this bill are indicative of the fundamental lack of understanding of this issue by the very groups pursing it,” said GPhA chief executive Ralph Neas. “This misguided policy would ban settlements that actually stand to benefit patients and would lead to fewer generic drugs coming to market in a timely fashion,” he claimed.
– A provision to end pay-for-delay deals was included in President Barack Obama’s fiscal 2012 budget, with an estimate that this would save the federa government $8 billion over a decade.
