AMCP is supportive of S. 27, the “Preserve Access to Affordable Generics Act,” which was passed by the Senate Judiciary Committee in July and is currently eligible for consideration by the full Senate. The legislation would presume illegal settlement agreements between brand-name and generic pharmaceutical manufacturers that would delay the entry of a generic drug to the marketplace. By delaying entry of generic drugs into the marketplace beyond original patent terms, these agreements keep drug prices artificially high.
The Federal Trade Commission (FTC) under both Democratic and Republican administrations has long considered these settlement agreements as anticompetitive. In his FY12 budget request, President Obama proposed authorizing the FTC to presume all such agreements illegal and estimated a savings of $8.8 billion over 10 years to the federal government alone. Separate analysis by the FTC has estimated total savings to
both public and private payers as $35 billion over 10 years.
Dear Senator Kohl:
On behalf of the more than 2 million retirees represented by the National Retiree Legislative Network (NRLN), I want to commend you for sponsoring S. 27, the Preserve Access to Affordable Generics Act. Your bill would do a great deal to enhance competition in America's pharmaceutical market by stopping anticompetitive agreements between brand name and generic drug manufactures. The NRLN believes as you do that increased competition among drug makers will help reverse the upward spiral in the cost of medicine for America’s consumers—especially retirees living on modest incomes.
The NRLN has long been an advocate for preventing drug companies from contracting with generic drug manufacturers to inhibit competition in the marketplace.
Intellectual Property Owners Association (“IPO”) writes to express its opposition
to S. 27, “Preserve Access to Affordable Generics Act” and to urge you to vote against
S. 27 in the Senate Judiciary Committee.
IPO is a trade association representing companies and individuals in all industries
and fields of technology who own or are interested in intellectual property rights. IPO’s
membership includes more than 200 companies and more than 12,000 individuals
involved in the association either through their companies or as inventor, author,
executive, or law firm members.
S. 27 would amend the Federal Trade Commission Act (15 U.S.C. § 44 et seq.) to
add a new Section 28 and would create a presumption of anti-competition and illegality
of so-called “reverse payment” settlements of pharmaceutical patent litigation. Such
settlements are defined broadly in the legislation as any settlement in which an
innovator pharmaceutical company gives something of value to a generic litigant and the
generic litigant agrees not to research, develop, manufacture, market or sell a product
under its Abbreviated New Drug Application (“ANDA”) for a period of time. This
presumption of anti-competition and illegality could be rebutted only if the parties to the
agreement demonstrate by clear and convincing evidence that the procompetitive effects
of the agreement outweigh the anticompetitive effects of the agreement. S.27 would
also increase the penalties for violation the new Section 28, authorizing a civil penalty
up to three times the value received by any party that is attributable to the violation.
IPO does not believe that consumers are harmed by “reverse payment” settlements. In
many instances, consumers benefit by such settlements, which provide for certain generic
products to launch before the expiration of the litigated patent. Settlement agreements may promote competition because they may provide market entry of a generic before the generic company would otherwise have been able to enter, that is, at the expiration of a valid and enforceable patent. Reverse payment settlements also supplement the generic pharmaceutical industry, allowing for potentially lower generic drug prices.
By imposing a presumption of anti-competition and illegality, S. 27 undermines and
devalues pharmaceutical patents by imposing a presumption that any settlement involving a payment to the generic applicant is to protect an undeserved pharmaceutical patent.
This legislation would upset the careful balance of the Hatch-Waxman Act which provides
an expedited approval pathway for generic pharmaceutical manufacturers without undermining the innovator pharmaceutical developer’s incentives to continue investment and development of life-saving medicines. Our strong patent system has encouraged capital investment by innovator companies in costly and risky laboratory research and clinical trials to develop new pharmaceutical products that extend life and alleviate human suffering. A collateral effect of this continuous cycle of innovation is the eventual availability of a greater number of generic products. However, without the protection of a robust patent system, pharmaceutical products can be easily copied with little investment, interrupting the cycle of new investment in research and clinical trials for the development of new drugs.
IPO believes that current antitrust laws are adequate to challenge settlement agreements
that are truly anticompetitive. The FTC already has broad powers to monitor Hatch-Waxman settlement agreements and enforce its powers when warranted. The courts also have the power under existing antitrust law to hold the settlement unlawful when warranted.