CBO: Pay-to-delay ban could save $4.8B

The Congressional Budget Office has analyzed the proposed pay-to-delay ban, and its money-saving estimate comes in at almost $5 billion. According to CBO, the Preserve Access to Affordable Generic Drugs Act would cut direct healthcare spending--by Medicare, for instance--by $4 billion, plus increase federal revenue by $800 million. As Pharmalot notes, the CBO report also estimates $400 million in savings on appropriated spending.

Some government officials have been eyeing a ban on patent settlements that involve payments in return for delayed generic launches. The Federal Trade Commission has been suing drugmakers for years now, seeking to overturn various patent settlements it finds objectionable, and agency chief Jon Liebowitz has been saying that banning such settlements would save taxpayers $3 billion or more.

Sen. Herb Kohl (D-WI) has taken up the banner, and he co-sponsored the bill CBO just analyzed. It made its way through the Senate Judiciary Committee but hasn't yet been approved by the Senate. President Obama also joined in, with a pay-to-delay ban in his 2012 budget proposal, said to save the federal government $8 billion over 10 years.

Not surprisingly, both branded drugmakers and generics firms are against the ban. They say patent settlements often result in generic launches before a branded drug's patent expires.

- read the Pharmalot story