The FAIR Generics Act Makes its Debut; the Bill Takes a New Tack in Addressing Patent Settlement Agreements

By Kurt R. Karst –      

On November 16th, Senators Jeff Bingaman (D-NM), David Vitter (R-LA), Sherrod Brown (D-OH), and Jeff Merkley (D-OR) announced the introduction of the Fair And Immediate Release of Generic Drugs Act, or the “FAIR GENERxICS Act,” a draft version of which is available here. 

The bill would make significant changes to the Hatch-Waxman Amendments, as amended by the Medicare Modernization Act, with respect to 180-day exclusivity under FDC Act § 505(j), as well as to the patent laws at 35 U.S.C. § 271(e), and is aimed at addressing the perceived ill-effects on generic competition of patent settlement agreements between drug companies (or what opponents refer to as “pay-for-delay” or “reverse payment” agreements).  According to the bill’s sponsors, the bill is intended to address “the root cause of anti-competitive pay-for-delay settlements between brand and generic pharmaceutical manufacturers: the unintended, structural flaw in the Hatch-Waxman Act that allows ‘parked’ exclusivities to block generic competition.”

As with most things Hatch-Waxman, the bill is complex.  In a future post we may dissect the various provisions of the bill, which include broadening the FDC Act’s definition of “first applicant” and the interplay with patent settlement agreements.  According to a summary of the FAIR GENERxICS Act:

The legislation would prevent “parked exclusivities” from delaying full, fair, and early generic competition by:

• Granting the right to share exclusivity to any generic filer who wins a patent challenge in the district court or is not sued for patent infringement by the brand company.
• Maximizing the incentive for all generic challengers to fight to bring products to market at the earliest possible time by holding generic settlers to the deferred entry date agreed to in their settlements.
• Creating more clarity regarding litigation risk for pioneer drug companies and generic companies by requiring pioneer companies to make a litigation decision within the 45 day window provided for in the Hatch-Waxman Act.

As a result, say the bill’s sponsors, “companies who prevail in their patent challenges and immediately come to market may be the sole beneficiary of the 180 day exclusivity period.  In addition, companies will understand litigation risk before launching generic products.” (Italics in original.)

It is worth noting that the FAIR GENERxICS Act bears some resemblance to the Drug Price Competition Act of 2009, which was introduced in the U.S. Senate by Sen. Bill Nelson (D-FL) as S. 1315, and in the House of Representatives by Rep. Alcee Hastings (D-FL) as H.R. 3777.  We previously reported on the bill here.  The Drug Price Competition Act of 2009 died with the adjournment of the last Congress, but not before  Rep. Hastings, in December 2009, proposed and then withdrew from consideration his bill as an amendment to the House Health Care Reform Bill.