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GPhA: Omission of 'pay-for-delay' deals in health bill 'good news for American consumers'

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ARLINGTON, Va. A ban on patent settlements between branded and generic drug companies appears to have been eliminated from the healthcare-reform bill, according to a trade organization for the generic drug industry.

The Generic Pharmaceutical Association said it got word that a provision that would prohibit drug companies from making deals in patent litigation suits had been struck from the bill, currently pending in the House. The Wall Street Journal reported that the provision was dropped out of concern about conflicts with congressional rules.

“If true, that’s good news for American consumers who are increasingly turning to generic medicines to improve their health at affordable costs,” GPhA president and CEO Kathleen Jaeger said.

Such deals have come under attack from the Federal Trade Commission, which estimates that they cost consumers $3.5 billion a year. The FTC calls them “pay-for-delay” deals and charges that they postpone patients’ access to generic drugs.

Usually, a generic company will seek to market its version of a drug ahead of the expiration of its patent by filing an approval application with the Food and Drug Administration containing a Paragraph IV certification, asserting that the patent is invalid, unenforceable or won’t be infringed, prompting a patent litigation suit from the branded drug maker. When that happens, the FDA must wait for two and a half years before approving the generic drug or until the generic company wins or the companies reach a settlement out of court whereby the branded company pays the generic company not to launch immediately.

Payment can come in the form of money or an agreement by the branded company not to launch a so-called “authorized generic,” essentially the branded drug marketed under its generic name, either by itself or through a third-party company. In most cases involving settlements, the generic company is able to launch before the patent expires, but that happens less than half of the time when cases go to trial. In any case, according to the GPhA, the generic company can launch as soon as the patent expires, as delaying entry after patent expiration would be against the law.

In one recent case, generic drug maker Mylan settled a case filed by Takeda concerning its generic versions of the diabetes drugs Actos (pioglitazone hydrochloride) and Actoplus Met (pioglitazone hydrochloride and metformin). The settlement would allow Mylan to launch in August 2012, even though the patents for the drugs expire in 2016.

“Imposing a ban on patent settlements would have the unintended consequence of preventing pro-consumer settlements that would actually allow generic competition sooner than if the generic company had taken the case to its conclusion and lost -- always a possibility in patent litigation,” Jaeger said.

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