Pharma’s Pay-to-Delay Deals Face Further Opposition: Senate Bill Aims to Outlaw Tactic
File this under ‘hedging their bets.’ In advance of a March 25 argument before the US Supreme Court to review pay-to-delay deals, in which a brand-name drugmaker agrees to pay a settlement to a generic rival in exchange for ending patent litigation and launching a copycat medicine at a future date, two US Senators have introduced a bill to restrict these agreements.
At stake is a decision that could influence the cost of medicines for Americans because the ruling is expected to determine the pace at which lower-cost generic drugs become available. Drugmakers have struck dozens of these deals over the past decade or more, prompting increasing scrutiny at a time of rising health care costs. A recent report from the US Federal Trade Commission counted 40 deals in fiscal year 2012, up from 28 the year before (covered in prior Pharma news).
The review comes in response to formal requests from the US Federal Trade Commission, which calls the deals anticompetitive and claims these cost consumers about $3.5 billion annually, and Merck (MRK) which, like other drugmakers, maintain the agreements actually save Americans money because they allow generics to reach medicine cabinets sooner than they would otherwise.
Big Pharma companies -- including Pfizer (PFE), Merck, GlaxoSmithKline (GSK), Bristol-Myers Squibb (BMY) and Eli Lilly (LLY) -- have had a hard time of late generating revenue growth as patents expire on existing drugs and company labs develop too few new drugs. Pay-to-delay deals can extend the life of a patented drug.
However, Senators Amy Klobuchar, a Minnesota Democrat, and Chuck Grassley, an Iowa Republican, are in the camp that frowns on the deals and, just in case the Supreme Court rules in favor of the pharmaceutical industry, they have introduced a bill that would effectively make it “illegal for brand-name drugmakers to use “anti-competitive pay-off agreements to keep more affordable generic equivalents off the market, Klobuchar says in a statement.
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Ed Silverman, a contributing editor of YCharts, is the founder and editor of Pharmalot. He previously reported on the pharmaceutical industry and other business topics for the Star-Ledger of New Jersey, New York Newsday and Investor’s Business Daily. He can be reached at email@example.com.