U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) today reintroduced legislation to crack down on anti-competitive pay-for-delay deals. The Preserve Access to Affordable Generics Act would help put an end to the practice of brand-name drug manufacturers using pay-off agreements to keep more affordable generic equivalents off the market and help make sure consumers have access to cost-saving generic drugs they need. A report released by the Federal Trade Commission (FTC) shows the number of potential pay-for-delay agreements rose over 40 percent in 2012. Klobuchar and Grassley introduced similar legislation in 2010 following a resurgence of patent settlement agreements.
"These pay-for-delay deals keep more affordable generic drugs off the market, hurting consumers and stifling competition," said Klobuchar. "I have long supported efforts to crack down on this behavior and the recent rise in pay-for-delay agreements underscores the need for legislation to help make sure people have access to the drugs they need at a price they can afford."
"Clearly, pay-for-delay deal-making is an obstacle to getting cheaper prescription drugs on the market," Grassley said. "These anti-competitive patent settlements between brand and generic drug companies hurt consumers' access to affordable medications, and they hurt taxpayers who pay for prescription drugs under both Medicare and Medicaid. It's a practice that puts the interests of drug companies above the interests of consumers, and it's time for it to end."
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.
The Preserve Access to Affordable Generics Act would make it illegal for brand-name drug manufacturers to use anti-competitive pay-off agreements to keep more affordable generic equivalents off the market. The Congressional Budget Office (CBO) 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.
Klobuchar has been a leader in Congress on working to advance consumer protection and was recently appointed to chair the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights. Grassley is the ranking member of the Senate Judiciary Committee.