House passes limits on 'pay-for-delay' settlements

The U.S. House has moved against so-called pay-for-delay deals between branded drugmakers and generics companies. As part of a war-funding bill that passed last night, lawmakers approved new restrictions on the deals, giving the Federal Trade Commission more power to fight them. 

The FTC has been campaigning against cash settlements of patent disputes for some time now, saying that the deals keep cheaper generics off the market, costing consumers and the government billions of dollars. The House measure is "just another signal of the growing support in Congress for ending this unconscionable behavior by some pharmaceutical companies," FTC Chairman Jon Leibowitz told Bloomberg before the vote.

Drugmakers aren't thrilled with the legislation, to say the least. Industry lobbyists are working against it, hoping to forestall its passage in the Senate. One problem with the new rules, they say, is that they don't distinguish between patent settlements that stall generics and those that accelerate them. Teva Pharmaceutical Industries, for one, cited its new version of the antidepressant Effexor XR, which, under a patent deal with Wyeth, comes on the market seven years before the patent officially expires.

The Congressional Budget Office estimates that the provision would save the federal government $2.4 billion over 10 years, because Medicare and Medicaid would pay less for drugs. That number--whether you agree with it or not--could be a powerful impetus for Senate approval. But some key Senators are opposed to the restrictions.

- read the Bloomberg piece
- check out the coverage in the New York Times