Inclusion of Pay-for-Delay Ban in Health Care Bill Urged; FTC to Hold Press Conference Announcing Pay-for-Delay Analysis

By Kurt R. Karst –      

Over the past several weeks, proponents of a ban on so-called pay-for-delay settlements have put a full-court press on Congressional leaders to include provisions in the final Health Care Bill.  The House bill  includes a provision (§ 2573) sponsored by Bobby Rush (D-IL) that would amend the FDC Act to add section 505(w) – “Protecting Consumer Access to Generic Drugs” – to, among other things, make it unlawful for any person from being a party to any agreement resolving or settling a patent infringement claim in which an ANDA applicant receives anything of value, and the ANDA applicant agrees not to research, develop, manufacture, market or sell the generic drug that is the subject of a patent infringement claim.  The Senate bill does not include a pay-for-delay provision sponsored by Sen. Herb Kohl (see our previous post here).

In late December 2009, several Senators wrote a letter to Senate leaders asking for the final Health Care Bill to include the House bill’s ban on pay-for-delay settlements.  “By adopting this provision, conferees can significantly address the rising costs of prescription drugs.  These ‘pay for delay’ agreements between brand name and generic drug companies deny consumers the benefits of generic drug competition,” according to the letter. 

On January 11, 2010, the American Antitrust Institute (“AAI”), among several other organizations, wrote a letter to Senate Majority Leader Harry Reid (D-NV) and House Speaker Nancy Pelosi (D-CA) encouraging inclusion of the Rush amendment in the final Health Care Bill, as well as the Drug Price Competition Act of 2009, which was introduced last year by Sen. Bill Nelson (D-FL), and in the house by Rep. Alcee Hastings (D-FL).  That bill would amend the definition of “first applicant” at FDC Act § 505(j)(5)(B)(iv)(II)(bb) with respect to 180-day exclusivity eligibility so that certain subsequent ANDA applicants could trigger and be eligible for exclusivity (see our previous post here).  According to the AAI letter:

[Pay-for-delay] payments are anticompetitive and should be considered per se illegal: they prevent any generic manufacturer with a legitimate challenge to a patent from potentially entering the market. . . . 

Expanding the exclusivity period is vitally important, since it removes the barrier to entry that has protected collusive settlements between brands and first-filing generics. Including this language in the final health reform legislation would provide a strong complement to Representative Rush’s per se ban on these payments.

Now it is the Federal Trade Commission’s (“FTC’s”) turn to put on the pressure.  On January 12, 2010, the FTC announced that it will hold a press conference at the Rayburn House Office Building on January 13, 2010 “to announce an FTC staff analysis showing that pay-for-delay deals between brand and generic drug companies are costing American consumers billions a year, and to encourage inclusion of the House-passed pay-for-delay provision in the final version of the health care reform bill.”  The FTC – and FTC Chairman Jon Leibowitz in particular – has made no bones about its opposition to pay-for-delay settlements.  In June 2009, Chairman Leibowitz said in a speech that eliminating “pay-for-delay” settlements could save consumers $3.5 billion annually.