U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) today renewed their efforts to end the practice of brand-name drug manufacturers using pay-off agreements to keep cheaper generic equivalents off the market. A report released today by the Federal Trade Commission (FTC) shows the number of potential pay-for-delay agreements rose over 40 percent this year. Klobuchar and Grassley will reintroduce legislation this Congress to crack down on anti-competitive pay-offs and make sure consumers have access to the cost-saving generic drugs they need.
"Drug manufacturers are using pay-off agreements to keep cheaper generic drugs off the market while raking in huge profits, and it has to stop," said Klobuchar. "I have long supported efforts to prevent this anti-consumer practice and this new report highlights the need for legislation to help make sure people have access to the drugs they need at a price they can afford."
"Today's report shows that pay-for-delay dealmaking remains an obstacle to getting cheaper prescription drugs on the market. These anti-competitive patent settlements between brand and generic drug companies only serve to keep the price of prescription drugs high and reduce consumer choice," Grassley said. "While the Supreme Court will consider a case this year on these deals, Senator Klobuchar and I will continue to press for a legislative remedy to put consumers first."
Pay-for-delay settlements occur when brand-name drug companies seek to eliminate competition by paying generic manufacturers not to sell their products for a period of time. These agreements delay generic entry into the market nearly 17 months longer on average than agreements without payments. These pay-off settlements (also known as "reverse payments") delay consumer access to cost-saving generic drugs, which can be as much as 90 percent cheaper than brand-name drugs.
In 2010, Klobuchar and Grassley, along with three other senators, introduced the Preserve Access to Affordable Generics Act, a bill that would make it illegal for brand-name drug manufacturers to use pay-off agreements to keep cheaper generic equivalents off the market. This legislation came in response to the resurgence of patent settlement agreements. The Congressional Budget Office expects that enacting this legislation would accelerate the availability of lower-priced generic drugs and generate over $4.7 billion in budget savings to the federal Treasury between fiscal years 2012 and 2021.