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Affordable Rx Drugs Kept off the Market

Earlier this week, the Federal Trade Commission released a new staff report that found brand name and generic drug companies entered into 28 potential pay-for-delay deals between October 1, 2010, and September 30, 2011.  Under these pay-for-delay settlements, brand name prescription drug companies settle patent disputes by paying the generic drug manufacturer in exchange for a promise that it will keep its generic version of the drug off the market, thereby denying consumers more affordable prescription drugs.

This sneaky practice by pharmaceutical companies only serves to benefit the companies that engage in these settlements.  The wheeling and dealing between the brand name and generic drug manufacturers hurts consumers who don’t have access to more affordable prescription drugs, and it hurts taxpayers who, according to the Congressional Budget Office, pay for one-third of all prescription costs through Medicare and Medicaid.

Putting the interests of these few companies ahead of consumers and taxpayers needs to end.  That’s why Senator Herb Kohl and I have authored legislation that would end these settlements between generic and brand name drug companies that keep more affordable generics off the market.  

We also sent a letter to the deficit reduction committee, encouraging the committee to use our legislation as a cost-saving measure.   The Congressional Budget Office estimated that the Grassley-Kohl bill would save the federal government $2.68 billion over ten years.  The Federal Trade Commission estimates that ending these settlements would save consumers who pay for prescription drugs through private insurance or on their own $3.5 billion per year.   

The Washington Post also editorialized about the cost-saving measures in our legislation and the need to get more affordable prescription drugs to Americans.

According to the Federal Trade Commission staff report, companies reached 156 final patent settlements in fiscal 2011, and 28 of those settlements contained a payment to a generic manufacturer that restricted the generic company’s ability to market its product. The FTC went on to say that “Of those 28 settlements, 18 involved generics that were so-called ‘first filers,’ meaning that they were the first to seek FDA approval to market a generic version of the branded drug, and, at the time of the settlement, were eligible to exclusively market the generic product for (a) period of time.”  The Federal Trade Commission press release explains that “Because of the regulatory framework, when first filers delay entering the market, other generic manufacturers can also be blocked from entering the market, which makes such patent settlement deals particularly harmful to consumers.”

Consumers and taxpayers deserve better, and I hope the deficit reduction committee takes a good look at our legislation.

October 28, 2011