Pay-To-Delay Ban Dropped From Healthcare Reform
8 CommentsBy Ed Silverman // March 18th, 2010 // 7:39 am
The amendment was dropped from part of the health care reform bill because of concerns it wouldn’t pass muster with congressional rules, according to a spokeswoman for Senator Herb Kohl, a Wisconsin Democrat who chairs the Special Committee on Aging, which yesterday held a hearing on drug prices.
The proposal was vigorously supported by the Federal Trade Commission, which argues that so-called pay-to-delay deals hurt consumers by delaying the launch of lower-cost generics (background here). The proposed amendment would have made it harder for brand-name drugmakers to settle patent challenges brought by generic companies. Kohl plans to pursue the ban after health care reform is settled, according to The Wall Street Journal.
Kathleen Jaeger, president the Generic Pharmaceutical Association, the main lobby for the generic drug industry, says dropping the ban is good for consumers. “An across-the-board ban would reduce the number of patent challenges brought by generics, creating an unnecessary hurdle to bringing lower-cost generic drugs to the market,” she tells the paper.
Condor
Right — great catch, Ed!
Now, though — it will be a sidecar bill, later in 2010, or early 2011, I predict.
Of even greater importance, the CBO score on the newest “reconciliation version” of the omnibus bill is out — it has passed all the bugetary formulae/tests!
This means it is cleared for a vote, perhpas later this week or early next. [I guess all legislation is ultimately about compromises, right? Time, money and (special) interests.]
Namaste
HelicalZz
Why would a ban on pay-to-delay “reduce the number of patent challenges brought by generics”? Does the presence of pay-to-delay perhaps encourage challenge that would not necessarily prevail but are deemed cheaper to ’settle’?
Condor
Hello HelicalZz — I think the sound-bite argument runs thus (to be clear, I do not buy any part of it, though):
If the ban passes, these poor little generics will be more afraid of the FTC/DoJ — declaring invalid any settlement, pre-trial — than they will be, of the (potential) patent litigation fight, with Big Branded Pharma, directly.
That is, generics won’t bother, if they think they will be sued by the DoJ/FTC if they settle, and will have to spend to defend patent litigation, if they enter with a generic prior to patent expiry.
Of course, generics already are well-underway on dozens of pieces of such litigation (as we saw in the Teva Merck Temodar delay on appeal deal, of just yesterday), the world over. And there are billions of dollars at stake — so, certainly, the generics will come. If one or two bigger generics (Teva?) don’t — the others (smaller, hungrier ones) will.
So, this is a trolls’-concern, almost exclusively.
Of course, that’s just my opinion.
In addition, the full CBO “scorecard” report is now linked, as a giant, honkin’ PDF, here.
Namste
pharmavet
Here’s a thought. In return for pay to delay, the generic company should lose its 180 day exclusivity. If it wants the 180 days, then don’t pay to delay.
The problem is that this is too logical, and therefore probably would not pass.
Condor
Hello pharmavet –
I think yours is interesting, but in almost all cases, it is the branded pharma manufacturer paying the generic maker to stay off market for a period of time.
SO, your proposal would mean that if a generic maker settled its patent litigation with the branded co., and then brought the generic to market after the time-frame established in the agreement, there would be no six-month exclusivity?
I don’t think that would adequately deter many of the more egregious generic makers’ deals. [They'd just demand -- and get -- a bit bigger payment, from the branded companies, to cover the difference.]
No, I think each deal ought to be tested for arms’ length bona-fides, before it is allowed by FTC/DoJ. That is, the deals’ proponents ought to be able to show, by clear and convincing evidence, that their deals increase/improve — not hinder/thwart — price competition, in the relevant drugs’ markets.
I think that’s the most effective way to stop collusive “pay for delay” deals (which are, afterall, more akin to a bribery payment).
Namaste
bo
Pay to delay reduces competition and keeps prices artificially high. Innovator companies would not enter into these agreements if they did not benefit from them, period.
The 180 day excusivity is a seperate issue. Its intent is to incentivise the generic companies to develop generic equivalent ASAP. This part of the law, pay to delay is just that, a tactic.
Want to save consumers and tax payers money? Congress, FDA, and others should accelerate the effort to create a pathway for approval of biosimilars. PS We may see a little headway here if generic enoxaparin is approved although this is not a biotech drug.
Reality
“Pay to Delay” needs to be completely eliminated. It simply serves to add more piles of cash to Big Pharma’s coffers for an extended period of time. It doesn’t benefit consumers and destroys competition in the marketplace. It’s a payoff!!
patrons99
Bo and Reality - I agree. “Pay to Delay” needs to be completely eliminated. PDUFA timelines should also be applied to approval of biosimilars. If the PDUFA is here to stay, which I fear it may be, it should apply to biosimilars as well as to NDAs and sNDAs.