Anti-"Pay-for-Delay" Bill Reintroduced in Congress: The Battle Against Pharmaceutical Patent Settlements Is Growing
On January 25, Senators Herb Kohl (D-Wisconsin) and Chuck Grassley (R-Iowa) reintroduced the "Preserve Access to Affordable Generics Act". Calling "pay-for-delay" agreements "pay-off agreements," the Senators consider settlement agreements between generic and branded pharmaceutical companies to be an "anti-consumer practice." This bill has been referred to the Senate Judiciary Committee, where it awaits further action.
Although settlement agreements are typically encouraged as a matter of policy, various factions are working to change this when pharmaceutical patents are involved. Dubbed "pay-for-delay," there are those who consider settlements between warring pharmaceutical companies anti-competitive. Thus, such agreements are being attacked on several fronts. See some of our previous blogs on "pay-for-delay" here (December 31, 2010), here (December 16, 2010), here (August 3, 2010), and here (May 10, 2010).
Similar bills have been introduced--and died--in Congress in each of the last three sessions. Regarding last year's bill, FTC Chairman Jon Leibowitz commended the Senate Judiciary Committee for their efforts, stating his opinion that "that stopping these pay-for-delay settlements will save consumers about $3.5 billion per year and advance the cause of affordable health care for all Americans." Despite such sentiments, the full Senate never voted on the previous bills.
Indeed, current law supports settlement agreements that end pharmaceutical patent disputes. For instance, the Federal Circuit Court of Appeals noted that such settlements do not violate antitrust laws because the agreements fall within the exclusionary zone granted by patents. Additionally, last year a Second Circuit Court of Appeals panel considered Louisiana Wholesale Drug Co., Inc. v. Bayer AG, affirming (per curiam) a lower court's ruling in favor of such a settlement agreement. Despite that panel's suggestion, the Second Circuit later denied a petition for rehearing in banc. However, the U.S. Supreme Court is currently considering a certiorari petition filed on the Louisiana Wholesale Drug case. In response, several amicus curiae briefs have been filed. If the Supreme Court grants the petition, the case is guaranteed to get a great deal of attention.
No matter how this battle turns out, what is certain is that so-called "pay-for-delay" will continue to be in the news this year.