GPhA: Banning patent settlements will cost money, not save it

WASHINGTON The main lobbying group for the generic drug industry said federal authorities erred in projecting savings from a proposed ban on patent litigation settlements between branded and generic drug companies.

The Generic Pharmaceutical Association said the Federal Trade Commission and the Congressional Budget Office used faulty assumptions to support legislation against the settlements, based on an analysis led by former Clinton administration official Jonathan Orszag.

“Making drug patent litigation settlements presumptively unlawful will cost, not save, money for the government and consumers,” a statement by the GPhA read. “There are no examples of patent settlements that have delayed generic market entry beyond the date of the patent expiration. But there are many examples of settlements that have proven to be pro-competitive and pro-consumer by making lower-cost generics available months and even years before patents have expired.”

In many such lawsuits, a generic drug company will file for regulatory approval of its version of a branded drug before patent expiration. In response, the branded drug company will file a patent infringement lawsuit, placing a stay on Food and Drug Administration approval of the generic. Often, the two companies will reach a settlement whereby the generic company will agree to hold off launching its version of the drug in exchange for “payment” from the branded drug company, usually in the form of the branded drug company agreeing not to launch an “authorized generic” –– essentially the branded drug marketed under its generic name at a discount –– to compete with the generic.

Critics of the deals have derided them as “pay-for-delay” deals, though by law, the generic drug maker is forbidden from delaying launch beyond patent expiration, and launch often occurs ahead of expiration.

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