The US House of Representatives has approved legislation aimed at deterring pharmaceutical companies from paying generics firms to delay the launch of ‘copycat’ drugs onto the market.
It is not uncommon for a generics company to try to launch a metoo version of a brand name drug before the patent on that drug has fully expired, often claiming that the patent is invalid. Instead of going through lengthy and expensive litigation to argue the toss, the pharmaceutical company will make a payment to the generics firm to delay the launch of the drug.
Such collusive deals between brand name and generic drug companies cost consumers around $3.5bn/year by delaying consumers’ access to lower-cost generic drugs, according to economists at the US Federal Trade Commission (FTC).
In an effort to clamp down on the practice, an amendment has been made to the War Funding Bill that would make it unlawful to settle such patent infringement claims in this way.
‘Congress has taken a critical step towards ending a practice that is dramatically increasing the cost of prescription drugs,’ said Jon Leibowitz, chair of the FTC. ‘This bipartisan legislation would save American consumers and taxpayers billions of dollars by stopping socalled ‘sweetheart’ deals that delay the entry of low-cost generics, while at the same time allowing settlements that benefit consumers.’
Unsurprisingly, both the pharmaceutical and generic industries are displeased with the move, claiming it is bad for consumers. The Generic Pharmaceutical Association (GPhA) warns that a curb on settlements will delay access to affordable medicines and has called on the Senate to reject the amendment. ‘More than a decade of evidence shows that patent settlements actually help bring lower-cost generic drugs to market much sooner than patent expiration dates, saving millions of dollars for consumers and the health care system,’ said the GPhA.
‘Settlements resolve costly and time-consuming patent litigation and often allow the generic version of a medicine to enter the market before the patent is due to expire,’ says Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA). ‘Law and public policy have always favoured settlements,’ he says, adding that the legislation is unnecessary because the FTC and others already have the authority to review and evaluate any patent settlement on a case-by-case basis to ensure that they are not harmful to competition.
The US Senate must now decide whether to approve the amended bill.