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Klobuchar Calls for End to Anti-Competitive Pay-Offs to Drug Companies

New Federal Trade Commission report says banning pay-for-delay settlements would save consumers $3.5 billion per year; Klobuchar pushes for inclusion of ban in final health care bill

January 13, 2010

Washington, D.C. – Following a report released today by the U.S. Federal Trade Commission (FTC), U.S. Senator Amy Klobuchar renewed her efforts to end the practice of brand-name drug manufacturers using pay-off agreements to keep cheaper generic equivalents off the market.  The new FTC report reveals that consumers are harmed by these so-called “pay-for-delay” agreements because generic drug prices can be as much as 90 percent less than brand-name prices.

“We’ve seen prescription prices increase year after year, while drug companies keep affordable generics off the market and rake in huge profits,” said Klobuchar.  “Ending this anti-consumer practice saves taxpayer dollars and should be included as a part of the health care reform bill.”

Pay-for-delay settlements occur when brand-name drug companies seek to eliminate competition by paying generic manufacturers not to sell their products.   These agreements delay generic entry into the market nearly 17 months longer on average than agreements without payments. The FTC report says that stopping the pay-for-delay settlements would save the federal government, which pays approximately one-third of all prescription drug costs, $35 billion over 10 years.   

Earlier this year, Senator Klobuchar, along with Senators Herb Kohl (D-WI), Chuck Grassley (R-IA), Russ Feingold (D-WI), Dick Durbin (D-IL) and Sherrod Brown (D-OH) introduced the Preserve Access to Affordable Generics Act, a bill that would make illegal the anti-competitive patent payoffs of brand-name drug manufacturers that keep cheaper generic equivalents off the market.
This legislation was voted out of the Senate Judiciary Committee earlier this year.
In December, Klobuchar along with eight Senators sent a letter to Senate Majority Leader Harry Reid urging that a ban on these settlements be included in the final health care bill. 

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