In a letter to FTC Chairwoman Edith Ramirez, the senators requested the prompt release of the agency’s annual report summarizing agreements where brand-name drug companies pay generic drug companies to delay marketing lower cost generic drugs

WASHINGTON, D.C. – U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) today urged the Federal Trade Commission (FTC) to release data on pay-for-delay settlements. In a letter to FTC Chairwoman Edith Ramirez, the senators requested the prompt release of the agency’s annual report summarizing agreements where brand-name drug companies pay generic drug companies to delay marketing lower cost generic drugs.

“Pay-for-delay agreements deny consumer access to more affordable alternatives to brand medications,” the senators wrote. “The 2013 and 2014 numbers will help Congress understand whether the Court’s decision [in Actavis v. FTC] has altered the behavior of drug manufacturers, and what legislative reforms are currently needed.”

Klobuchar and Grassley have long supported efforts to combat anti-consumer pay-for-delay settlements. The senators are the lead sponsors of the Preserve Access to Affordable Generics Act which would crack down on anti-competitive pay-offs and make sure consumers have access to cost-saving generic drugs they need. The legislation would make it illegal for brand-name drug manufacturers to use anti-competitive pay-off agreements to keep more affordable generic equivalents off the market. Klobuchar and Grassley introduced similar legislation in 2010 following a resurgence of patent settlement agreements. In July 2013, the Judiciary Committee Subcommittee on Antitrust, Competition Policy, and Consumer Rights held a hearing to scrutinize on pay-for-delay deals.

Pay-for-delay agreements delay generic entry into the market nearly 17 months longer on average than agreements without payments. These pay-off settlements (also known as “reverse payments”) delay consumer access to cost-saving generic drugs, which can be as much as 90 percent cheaper than brand-name drugs.

The full text of the senators’ letter is available below:

Dear Chairwoman Ramirez:

We are writing to request the prompt release of the 2013 fiscal year staff report on agreements filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, as well as a timely 2014 fiscal year staff report.

Since 2004, the Federal Trade Commission has released annual reports summarizing agreements between brand and generic medical manufacturers, providing important information on the use of pay-for-delay provisions in patent dispute resolutions.  Pay-for-delay agreements, monetary settlements made by brand name drug companies to generic drug companies in exchange for delaying the marketing of generic competitors, deny consumer access to more affordable alternatives to brand medications.  The FTC estimated that these anticompetitive deals result in consumers and taxpayers paying an additional $3.5 billion in higher drug costs every year.

It is critical to have access to these numbers in order to better understand the impact of “pay-for-delay” agreements.  In July 2013, the Judiciary Committee Subcommittee on Antitrust, Competition Policy, and Consumer Rights held a hearing on pay-for-delay deals where Chairwoman Ramirez stated that this issue is a top priority for the agency.  We applaud the efforts of the Federal Trade Commission to make this agreement information available, and seek your continued input on the matter.  Having up-to-date numbers is an important part of developing legislation that would curb this anticompetitive behavior.  

It is also important to understand how the 2013 Supreme Court case FTC v. Actavis has impacted patent dispute resolution, as well as the steps the FTC has taken since the decision to challenge pay-for-delay settlements.  While the decision made clear that these agreements are subject to antitrust scrutiny, you have stated that the litigation is both time and resource intensive, and lacks a bright line standard.  Your numbers from the 2012 staff report showed a dramatic increase in the number of these pay-for-delay agreements; release of the 2013 and 2014 numbers will help Congress understand whether the Court’s decision has altered the behavior of drug manufacturers, and what legislative reforms are currently needed.

We look forward to working with you to protect consumers and encourage competitive behavior in the medication marketplace.

Sincerely,
 

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