Lawmakers seem set to turn "pay-for-delay" into "no delay allowed." A House Energy and Commerce subcommittee is holding hearings today on the so-called pay-for-delay agreements drugmakers make with generics firms to stave off the launch of cheaper versions of their products. Both President Obama and some Democrats in Congress have pledged to outlaw the deals.
The Obama administration sees the deals as an obstacle to cutting healthcare costs, which, of course, is one of its chief aims. And it's true that the healthcare system would save big bucks if generic drugs made it to market more quickly. Obviously, generic meds can be much less expensive than branded drugs, and given the billions spent on prescriptions every year, lower drug prices could cut billions from Medicare and Medicaid budgets.
Big Pharma has been defending its right to make pay-for-delay deals. They say that their drugs' patent protections allow them to make such agreements, and they say the deals help shore up profits and continue costly R&D.
But the Federal Trade Commission has been battling these agreements, saying they enable drugmakers to preserve their monopolies on certain products. Most recently, the Wall Street Journal notes, the FTC sued Cephalon, alleging that the company broke antitrust law by giving $200 million in cash and inducements to four generics makers, which in turn agreed to put off their versions of Provigil for six years. By making the deal, Cephalon got "$4 billion in sales that no one expected," CEO Frank Baldino Jr. said at the time. You can bet we'll find more examples in today's hearing.
- read the WSJ piece