Reports: Senators introduce bill to ban 'pay-for-delay' settlements

Bill would prohibit certain patent settlements between branded, generic drug makers

NEW YORK — Republican and Democratic senators have re-introduced legislation that would ban patent settlements between branded and generic drug companies that critics allege violate antitrust laws, according to published reports.

Reuters reported that Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, were sponsoring a bill to ban so-called "pay for delay" settlements. Critics of such settlements say they delay patients' access to cheaper generic drugs, while drug makers say the settlements are often necessary to allow launch of generics ahead of branded drugs' loss of patent protection, and that delaying generic launch beyond patent expiry would be illegal anyway.

When a generic drug company wishes to challenge a branded drug's patent, it will usually file a regulatory approval application with the Food and Drug Administration containing a paragraph IV certification, a legal assertion that the drug's patent is invalid, unenforceable or not at risk of infringement. In response, the branded drug company will generally sue the generic company. The companies may then settle the case before the court and make a deal that allows the generic company to launch ahead of patent expiration but requires it to wait for a period of time. While the "pay" part of the "pay-for-delay" deal may include a cash payment to the generic drug maker, it most often involves an agreement by the branded drug company not to launch a so-called authorized generic — essentially the branded drug marketed under its generic name at a reduced price — during the legally mandated 180 days following FDA approval in which the generic product can compete exclusively with its branded counterpart.

Branded and generic drug makers alike have strongly opposed attempts to ban the patent settlements, saying that requiring cases to go to trial will only further delay the availability of generics. Industry opposition has contributed to the defeat of previous bills to ban them, Reuters noted.

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