FTC Chairman Jon Leibowitz has implored Congress to end “pay-for-delay,” a pocket-lining practice in which drug makers pay generic competitors to keep their knock-offs out of the market.
Eliminating such shenanigans would save consumers at least $35 billion over the next decade, because generic drugs are priced far lower than their branded congeners.
A third of the savings would accrue to the federal government, which pays most of the drug costs for Medicare beneficiaries.
Calling the practice anticompetitive, Leibowitz said his crusade against pay-for-delay was one of his highest priorities.
“The decision about whether to restrict pay-for-delay settlements should be simple,” Leibowitz said during a recent speech in Washington. Right now, we “have a permissive legal regime that allows competitors to make collusive deals on the backs of consumers.”
The history of the problem stretches back 20 years, when Congress passed the Hatch-Waxman Act. The even-handed law was supposed to facilitate the process by which generic drugs entered the market, but it also extended patent protection on branded drugs to a full decade.
The legislation worked initially but eventually Big Pharma discovered there was gold in pay-for-delay tactics.
The FTC cracked-down on the tactics earlier this decade, but a string of appellate court decisions have upheld the seemingly shady agreements, “with generic firms competing to be the first to get paid off to stay out of the market instead of competing to be the first to come to market,” Leibowitz said.
Leibowitz has received from support from the Obama Administration, which has asked Congress to again address the matter. In addition, the Court of Appeals for the Second Circuit has asked the Department of Justice to weigh-in on its own precedent, established in a case involving Tamoxifen.