GPhA 'deeply disappointed' with 'pay-for-delay' ban in Obama healthcare bill

ARLINGTON, Va. President Barack Obama’s proposed healthcare bill may have its supporters and detractors, but one group unhappy about it is the generic drug industry.

The Generic Pharmaceutical Association criticized a part of the bill that would ban settlements between generic and brand drug companies in patent challenges, saying it would be costly to consumers.

“We are deeply disappointed that the administration has chosen to include measures to ban settlements of generic patent challenges in this renewed healthcare reform bill,” GPhA president and CEO Kathleen Jaeger stated.

The settlements, while decried by critics as “pay-for-delay” deals, are a common practice and currently legal. Seeking to market a generic version of a branded drug before the branded drug’s patent expires, a generic company will file an approval application with the Food and Drug Administration that includes a Paragraph IV certification, asserting that the patent is invalid, unenforceable or won’t be infringed. In virtually all cases, the brand drug maker will respond with a patent infringement lawsuit, which prevents the FDA from approving the generic drug for 30 months or until the matter is resolved before the court.

Often, the brand and generic company will reach a settlement, which can include anything from monetary payment by the brand company to an agreement not to launch an “authorized generic,” essentially the branded drug marketed under its generic name, in exchange for the generic company putting off entry into the market.

But in any case, Jaeger has told Drug Store News, the settlements usually allow the generic company to enter the market prior to patent expiration, in addition to the six months of market exclusivity that it gets when the patent expires; for the generic company to continue delaying entry after the patent had expired, Jaeger said, it would be illegal. According to analysis by the Royal Bank of Canada, in cases where patent challenges were litigated to their conclusion, generic drugs entered the market prior to patent expiration 48% of the time, versus 76% of the time when the brand and generic companies reached a settlement.