On October 15th, the Senate Judiciary Committee voted out S. 369 (here is the bill), the ban on pay-for-delay settlements between brand-name pharmaceutical manufacturers and generic-drug companies. The purpose and result of these settlements is that the generic drugs come to market later. This means that patients and insurers must wait to have access to the drugs they need at the much lower generic price. This bill would pave the way for cost savings, since generic drugs would come to market faster. The FTC has estimated the savings at $35 billion to consumers and $12 million to the federal government over ten years.
The House and the Senate each have a bill on this issue, but they differ slightly in terms of enforcement of the ban. The Senate version of the bill says that the agreements would be presumed illegal. However, the FTC would need to pursue legal action to challenge this agreement. The drug companies would then have the opportunity to go to court and argue that the agreement is ‘pro-competitive’. If the FTC wins the court case, they would have the authority to assess significant civil penalties on the drug companies.
The House version of this bill (here is the House version) is attached to the tri-committee health reform bill and came out of Energy and Commerce. The ban in the House modifies Section 505 of the Federal Food, Drug, and Cosmetic Act and puts enforcement directly in the hands of the FTC. This amendment does not provide for rebuttal by the parties in court, but instead would allow the FTC to exempt agreements where the value of the payments to the generic drug company do not exceed certain thresholds.
Both the Senate and the House versions include some parameters for the FTC to utilize when making their decisions about to enforce the ban on drug companies. The House language leaves the exception determinations to the FTC to resolve, while the Senate version specifically calls for judicial review in the D.C. Circuit Court.
This Senate version of the bill now moves to the full Senate.