Senators urge congressional super committee to support 'pay-for-delay' ban

Sens. Kohl, Grassley seek ban on patent settlements that include payments

WASHINGTON — Two senators are trying to get the Joint Select Committee on Deficit Reduction to take up a bill that would ban so-called "pay-for-delay" patent settlements between brand and generic drug companies, according to published reports.

The Pharma Letter reported that Sens. Herb Kohl, D-Wis., and Chuck Grassley, R-Iowa, had urged the "super committee" to support a bill that would ban settlements that include any form of payment in exchange for holding off launch of a generic drug.

When a generic drug company wants to launch a product ahead of the expiration of the patent covering the branded version, it will file an application with the Food and Drug Administration containing a paragraph IV certification, an assertion that the patent is invalid, unenforceable or won't be infringed. In response, the brand manufacturer will usually file a patent infringement suit, but many of these suits never go to trial and instead end in a settlement between the two companies.

In what the senators, the Federal Trade Commission and several advocacy groups have called "pay-for-delay" settlements, the generic drug company will agree to not immediately launch its product in exchange for a cash payment or, more often, a pledge by the brand company not to launch an authorized generic — essentially the branded drug marketed under its generic name for a lower price — during the 180 days of market exclusivity in which the generic and branded versions compete directly with one another. Nevertheless, in virtually all cases, generic launch takes place months and sometimes years ahead of patent expiration.

Critics say the deals delay generic launches for too long and thus cost consumers and the federal government billions of dollars, while brand and generic drug companies say the deals are often necessary to ensure the timely launch of a generic. At any rate, waiting until after patent expiration to launch would be against the law.

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