The bill, also known as the ‘Fair and Immediate Release of Generic Drugs Act’ or ‘FAIR Generics Act’ intends to address the growing cost of health care by preventing the delay of generic drugs entering the market.

A provision in the Hatch-Waxman Act gives the first generics company to file an abbreviated new drug application (ANDA) with FDA the exclusive right to sell their generic drug for 180 days after the patent on the originator product expires without competition from other generics. The law provides the framework to incentivise brand-name companies to develop new medicines and generics manufacturers to bring medications to market.

The problem is that the first-to-file generics manufacturer is often paid by the originator company to delay market entry with their generic drug until after the 6‑month exclusivity period ends. This means that the brand-name product has a further six months to keep its market share and high price until other generics can enter the market, at which time the brand-name product rapidly loses market share—down to 20% within six months of competition from generics—and the price drops significantly [1].

There has been much debate that these so-called 'pay-to-delay' deals delay the entry of generics to the market and thus force American patients and the US federal government to purchase more expensive drugs for longer than is necessary.

The Federal Trade Commission (FTC), which has long been critical of these deals, has stated that these deals ‘are already costing consumers and taxpayers US$3.5 billion a year in higher drug prices.’ FTC Chairman Mr Jon Leibowitz said that ‘the increasing number of these deals is a win–win proposition for the pharmaceutical industry, but a lose–lose for everyone else’ [2].

The FAIR Generics Act aims to solve this problem by allowing any generics company that wins a patent challenge in district court or is not sued by the brand-name company to share most of the 180-day market exclusivity that was originally reserved for the first-to-file company only. This new incentive structure would end the pay-to-delay problem and bring less expensive generics to market sooner.

However, some, like the Generic Pharmaceutical Association (GPhA), argue that patent settlements save consumers and taxpayers billions of dollars. In fact, a GPhA report issued in September 2011 pointed to the fact that many generics have entered the market before the patents on their brand-name equivalents expired, thanks to patent litigation settlements between generics and brand-name companies [3].

Editor’s comment

Do pay-to-delay deals delay entry of generics or not? Would removing the 180-day exclusivity for first-to-file bring generics to market sooner? One thing most people can agree on though is that affordable medicines should be available as soon as possible, but what is the best way to make this happen?

Please feel free to share your thoughts via email to editorial@gabionline.net or in the comments section below. What are your views on the continuing pay-to-delay debate? Should legislation be introduced banning these deals and removing the 180-day exclusivity? Or do these deals result in generics being available sooner than would otherwise be possible?

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References

1. GaBI Online - Generics and Biosimilars Initiative. Generics grab 80% share of US market and fill 78% of prescriptions [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 November 25]. Available from: www.gabionline.net/Reports/Generics-grab-80-share-of-US-market-and-fill-78-of-prescriptions

2. GaBI Online - Generics and Biosimilars Initiative. Pay-to-delay deals up by 60% in US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 November 25]. Available from: www.gabionline.net/Pharma-News/Pay-to-delay-deals-up-by-60-in-US

3. GaBI Online - Generics and Biosimilars Initiative. Generics saved US$931 billion over last 10 years [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 November 25]. Available from: www.gabionline.net/Generics/Research/Generics-saved-US-931-billion-over-last-10-years