FTC Chairman and US Congress members call for US legislation to end ‘pay-for-delay’ deals

Home/Policies & Legislation | Posted 10/02/2010 post-comment0 Post your comment

On 13 January 2010, US Federal Trade Commission (FTC) Chairman Jon Leibowitz and key members of US Congress, including Representative Chris Van Hollen, Chairman Bobby Rush, and Representative Mary Jo Kilroy, renewed their call for US legislation that would put an end to anticompetitive patent settlements, which drug manufacturers have been using to keep less-expensive medicines off the market and charge consumers billions of dollars a year in higher drug prices.

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Speaking at a joint press conference, Mr Leibowitz said consumers are forced to pay inflated prices or forgo their medication because of these ‘pay-for-delay’ deals, in which brand-name drugmakers pay their generic competitors to keep cheaper alternatives off the market. He urged US Congress to adopt a provision as part of the healthcare reform bill to stop pay-for-delay agreements.

“Pay-for-delay deals are a bad prescription for America: when drug companies agree not to compete, consumers lose”, Mr Leibowitz said. “Ending this practice as part of healthcare reform is one simple, effective, and straightforward way for Congress to help control drug costs”.

In a written statement, FTC Commissioner J Thomas Rosch said, “As I testified last year before Chairman Rush’s subcommittee, almost all, if not all, reverse payment agreements delay generic competition longer than it might otherwise occur”.

Mr Leibowitz also announced that the FTC staff has issued a new study, entitled ‘Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions’, that summarises the savings lost to US consumers during the past six years through such pay-for-delay deals in the drug industry, and found that the number of agreements with payment and delay has increased from zero in 2004 to a record 19 agreements in Fiscal Year 2009.

According to the study, which can be found on the FTC’s Web site at http://www.ftc.gov/os/2010/01/100112payfordelayrpt.pdf, the cost to consumers from pay-for-delay deals is an estimated US$3.5 billion per year – or US$35 billion over 10 years. The study also found that settlement deals featuring payments by branded drug firms to a generic competitor kept generics off the market for an average of 17 months longer than agreements that do not include a payment. Most of the agreements reached since 2005 are still in effect, according to the study, and they currently protect at least US$20 billion in sales of brand-name drugs from generic competition.

References:

Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions - An FTC Staff Study. FTC Report January 2010.

FTC Chairman, Members of Congress Call for Legislation to End Sweetheart “Pay-for-Delay” Deals That Keep Generic Drugs Off the Market - Agreements Cost Consumers Billions of Dollars Each Year, Delay Market Entry of Generic Medicines by an Average of 17 Months. FTC Press Release 2010 January 13.

Source: FTC Report; FTC Press

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