US drugmakers reacted with anger on Friday (July 2), as the House of Representatives voted in favour of measures to severely curb “pay-for-delay” deals between brand-name and generic firms, which were included, bizarrely, in the War Funding Bill.
The bill, HR 4899, is “must-pass” legislation, and to include within it measures to restrict such industry agreements is “a clear display of politics over policy,” said the Generic Pharmaceutical Association (GPhA), which declared itself “extremely disappointed” by the House tactics. “The fact is that supporters of limiting settlements could not pass legislation either as a stand-alone bill or as an amendment to Tax Extenders, so they pinned it on a bill that is intended to support our military troops,” the group added.
A ban on all pay-for-delay (also called “reverse payment”) deals was included in the original version of President Barack Obama’s health reform legislation but failed make it through to the final reconciled version. Under the proposals included in HR 4899, companies could be fined if the Federal Trade Commission (FTC) or the courts found that a deal had the effect of preserving an originator firm’s patent, but would also give companies 30 days to appeal such a ruling.
FTC chairman Jon Leibowitz, who has repeatedly stressed that banning such agreements is a priority for the agency, welcomed the House vote as “a critical step towards ending a practice that is dramatically increasing the cost of prescription drugs.” These “collusive deals” cost consumers about $3.5 billion a year by delaying consumers’ access to cheaper generics, according to FTC estimates, while the Congressional Budget Office (CBO) says that ending them would save the federal government $2.4 billion over 10 years, as the Medicare and Medicaid programmes would pay lower prices for drugs.
However, industry critics claim that proposals for a blanket ban on all such agreements fail to distinguish between pro- and anti-competitive deals, would jeopardize the value of patents and reduce incentives for innovation.
“Settlements resolve costly and time-consuming patent litigation and often allow the generic version of a medicine to enter the market before the patent is due to expire,” said Pharmaceutical Research and Manufacturers of America (PhRMA) senior vice president Ken Johnson, speaking ahead of the vote. A blanket ban is also unnecessary because the FTC and others already have the authority to review and evaluate any patent settlement agreement, he noted, adding: “the courts and enforcement agencies like the FTC are in the best position to review these settlements on a case-by-case basis to ensure that they are not harmful to competition.”
The bill, which was approved by the House on a 239-182 vote, now goes to the Senate, but it is unlikely to have such an easy ride there. At a hearing of the Senate Judiciary Committee’s antitrust subcommittee last month, both Democrat and Republican Senators suggested that the FTC’s campaign against the deals could discourage settlements which are pro-consumer and wondered whether the agency’s involvement is necessary, given that all such agreements are subject to court approval.
Last Friday the GPhA said it hoped that, when the War Funding Bill moves to the Senate, legislators there will recognise “the true harm this provision will do to patients” and remove it. “At a time when our government is searching for effective ways to reduce health care costs while providing quality care, it is astounding that Congress would consider limiting access to affordable medicines through a patent settlement ban. The Senate now has the chance to cast a vote for consumers and reject the politics of including the settlement language in the War Funding Bill,” says the group.
