The move comes after the House and Senate failed, in December 2010, to agree on an appropriations bill, which included pay-to-delay restrictions.

Pay-to-delay settlements involve agreements in which brand-name and generic drug manufacturers settle patent disputes by exchanging a payment for a commitment to refrain from marketing a generic off the market for a set period of time.

US Senator Mr Herb Kohl, a Wisconsin Democrat, submitted the bill along with Iowa Republican Mr Chuck Grassley. “Generic drugs save consumers and the federal government money, to the tune of billions of dollars a year. But in order to freeze out competition and delay entry of low-cost generic drugs for consumers, brand-name drug companies pay off generic manufactures to keep their products off the market. It is past time to put an end to these backroom deals and pass this bipartisan legislation,” said Senator Kohl.

In his 2012 budget proposal President Obama stated his intention to “increase availability of generic drugs by providing the Federal Trade Commission (FTC) authority to stop drug companies from entering into anticompetitive agreements intended to block consumer access to safe and effective generics.”

The FTC claims that passing legislation to restrict pay-for-delay deals between brand-name and generic drugmakers will save US consumers billions of dollars. According to FTC economists these deals cost consumers about US$3.5 billion (Euros 2.54 billion) a year by delaying consumers’ access to lower-cost generic drugs. The findings were challenged by a report funded by drugmakers which claimed that ‘the Congressional Budget Office’s estimate of potential savings is likely to be significantly overstated.’ This was mainly due to the fact that the FTC failed to take into account that these deals may avert ‘continued litigation that may well delay generic entry substantially.’

However, a report from December 2010 from the Department of Health and Human Services supports the FTC findings, highlighting pay-for-delay deals, along with the FDA’s backlog of Abbreviated New Drug Applications, as key factors that could hamper the growth of savings generated by generic drugs.

PhRMA, representing innovative Pharmaceutical Research and Manufacturers of America, responded with disappointment to the President’s budget proposal, stating that this would ‘reduce incentives for future medical innovation’ and adding that ‘patent settlements are a vital aspect of a patent owner’s ability to protect intellectual property.’

The US Generic Pharmaceutical Association (GPhA) also reacted with concern over the proposal to ban patent settlements, stating that it is “a misguided public health policy initiative that has repeatedly failed to receive Congressional support in separate and frequent legislative attempts. The Administration’s proposal purports that such a ban would save US$8.8 billion (Euros 6.39 billion) over the next 10 years. GPhA believes that this economic assumption is fatally flawed.”

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