(BOSTON) – The CBO doubled their previous estimate of projected savings that would result from a ban on the increasingly common pay-for-delay deals that keeping generic drugs off the market. CBO now predicts that The Preserve Access to Affordable Generics Act, S.27, will save the federal budget $4.8 Billion over the 2012-2021 period, up from the $2.4 billion score in June 2010.

CBO’s scoring of S.27 also predicts that a ban on these pay-for-delay settlements under the bill “would reduce total expenditures on prescription drugs in the United States, on net, by about $11 billion over the 2012-2021 period.”  President Obama included the proposed ban on pay-for-delay deals in his proposal to the Congressional Super Committee working on reduction of the federal deficit.

The following is a statement from Wells Wilkinson, director of the Prescription Access Litigation project at Community Catalyst, on the latest CBO score.

“We urge members of the Super Committee to take a hard look at this proposal as a means to both reduce the federal deficit through prescription drug savings and give consumers better access to less costly generic drugs.

“Pay-for-delay deals blocked 20 new generics from entering the market last year, and another 25 this fiscal year, preventing competition to over $18 billion in brand-name drug sales. The CBO’s updated estimate of future saving reflects the increasingly common collusion by the drug industry to keep generics off the market and out of the hands of consumers.

 “Pay-for-delay settlements are sweetheart deals where a brand name drug maker pays their competitors to delay selling a generic version of a drug. Cloaked in the context of patent litigation, this practice has driven up overall health care cost $3.5 billion or more a year since it became widespread in 2006, according to the Federal Trade Commission (FTC).

“An FTC report released last month revealed that in FY2011, pay-for-delay settlements stopped generic competition with 22 brand-name drugs that amount to $9 billion in annual costs to our health system. A previous FTC report revealed that the 31 different pay-for-delay deals finalized in FY2010 insulated 22 other brand-name drugs from generic competition. Those drugs amounted to $9.3 billion in annual drug costs.

“These deals, which occur in the context of a patent dispute, have been consistently challenged by both the FTC and private sector attorneys on behalf of consumers. But in 2005, the courts started upholding these suspect deals.

 “Community Catalyst supports this important reform both to allow public programs and private sector health plans alike to reduce costs, and also to help ensure easier, more affordable access to needed medicines for patients.”

The Prescription Access Litigation project at Community Catalyst has helped consumers and insurers file litigation challenging the pay-for-delay deals that have delayed generic versions of the drugs Provigil, Cipro, Oxycontin, K-Dur, and Tamoxifen. Pay-for-delay settlements are filed under seal with the FTC, and are not generally available to the public. 

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About Community Catalyst
Community Catalyst is a national non-profit consumer advocacy organization dedicated to quality affordable health care for all. Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone – especially vulnerable members of society. For more information, visit www.communitycatalyst.org. Read or comment on our blogs at http://blog.communitycatalyst.org/ and http://postscript.communitycatalyst.org/. Follow us on Twitter @saferxwatch and @healthpolicyhub.