Soon Congress may pass a bill called the “Preserve Access to Affordable Generics Act.” This bill was designed to end the practice of Big Pharma companies protecting profits from major brand name drugs by paying off generic manufacturers to delay the public’s access to lower cost generic drugs. The adverse impact of this practice on consumers’ ability to obtain low cost drugs is great.  According to the Federal Trade Commission, the so-called reverse payment settlements in patent lawsuits (typically brought by brand name pharma companies against generic companies that file Abbreviated New Drug Applications (ANDA) with the FDA in anticipation of marketing  a generic drug when the branded version’s patent is about to end) delay the entry of generic drugs to the market for approximately 17 months at a cost to consumers of $3.5 billion per year. See Pay for Delay, How Drug Company Pay-Offs Cost Consumer’s Billions http://www.ftc.gov/os/2010/01/100112payfordelayrpt.pdf. The Congressional Budget Office estimates that banning these payments could save the federal government $1 billion during the next five years and $2.7 billion during the next 10 years.

The bill will protect consumers by permitting the FTC to treat as presumptively anti-competitive any settlement in which the generic manufacturer receives anything of value and the generic manufacturer agrees to limit or forego the research, development, manufacturing, marketing or sales of its product for any period of time unless the parties to the agreement demonstrate by clear and convincing evidence that the pro-competitive benefits of the agreement outweigh the anticompetitive effects of the agreement.

Despite the projected cost savings to the public and government, it is far from certain if this bill will ever become law.  The U.S. House of Representatives passed the measure in July by a vote of 239 to 182.  The companion bill in the Senate awaits a full vote.  This bill, however, continues to come under attack by the pharmaceutical industry.  Recently, a study funded by the Pharmaceutical Research and Manufacturers of America argued that the cost savings projected by the Congressional Budget Office was based on a flawed analysis and overstated the savings that would result from restricting reverse payment settlements.  The debate surrounding this bill will continue for some time. If this legislation is not passed, consumers and health care plans will continue to bring class actions in courts across the country in order to stop these reverse payments.

Abbey Spanier will continue to monitor the pending legislation and will report any significant developments.