Ban on "pay-for-delay" drug deals could save $4.8 billion

NEWS IN BRIEF — Posted Nov. 21, 2011

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A bill that would ban drug patent settlements that stall the introduction of generic drugs would save the federal government $4.8 billion over a decade by making generic drugs more available, according to a Nov. 7 Congressional Budget Office estimate. These patent settlement provisions, also known as "pay-for-delay" arrangements, would be allowed if the parties show clear and convincing evidence that the settlement is more pro-competitive than anti-competitive.

"Pay-for-delay deals are keeping generic drugs off the shelves at a great cost to consumers and taxpayers," said Sen. Herb Kohl (D, Wis.), lead sponsor of the Preserve Access to Affordable Generic Drugs Act. The measure has eight co-sponsors. One of them, Sen. Charles Grassley (R, Iowa), urged the Joint Select Committee on Deficit Reduction to include the legislation in any package they consider by their Nov. 23 deadline.

However, the leader of a generic drug industry association said the CBO estimate is flawed, because it assumes these patent settlements delay the introduction of generic drugs more than litigating the patent lawsuits would.

"The bottom line is that settlements have never delayed generic market entry beyond the date of the patent expiration, and instead have proven to be pro-competitive and pro-consumer by making lower-cost generics available months and even years before patents have expired," said Ralph G. Neas, president and CEO of the Generic Pharmaceutical Assn. Also, the CBO estimate relies on data from the Federal Trade Commission, which has supported a ban on pay-for-delay arrangements while ignoring contradictory private-sector data, Neas said.

Note: This item originally appeared at

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