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Corporate & Securities Law

: Antitrust Review

Bill To Ban ?Reverse Payment? Settlements Introduced

By David Fischer

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Yesterday, Senators Kohl and Grassley introduced a bill “to prohibit brand-name drug manufacturers from using pay-off agreements to keep cheaper generic equivalents off the market.” They titled their bill ”The Preserve Access to Affordable Generics Act” (S. 369). It is similar as the “The Preserve Access to Affordable Generics Act” (S. 316) that was introduced in the last Congress. That bill did not reach the Senate floor.

Although the substantive provisions are the same in the two bills, there are some differences in the “findings” sections:

S. 316 (2007 Version)	S. 396 (2009 Version)
?prescription drugs make up 11 percent of the national health care spending but are 1 of the largest and fastest growing health care expenditures?	?prescription drugs make up 10 percent of the national health care spending but for the past decade have been one of the fastest growing segments of health care expenditures?
?56 percent of all prescriptions dispensed in the United States are generic drugs, yet they account for only 13 percent of all expenditures?	?67 percent of all prescriptions dispensed in the United States are generic drugs, yet they account for only 20 percent of all expenditures?
?generic drugs, on average, cost 63 percent less than their brand-name counterparts?	?generic drugs, on average, cost 30 to 80 percent less than their brand-name counterparts?
?the FTC found that more than 2/3 of the approximately ten settlement agreements made in 2006 include a pay-off from the brand in exchange for a promise by the generic company to delay entry into the market?	?the FTC found that 1/2 of the settlements made in 2006 and 2007 between brand name and generic companies, and over 2/3 of the settlements with generic companies with exclusivity rights that blocked other generic drug applicants, included a pay-off from the brand name manufacturer in exchange for a promise from the generic company to delay entry into the market?

A comparison of the findings appears to show that over the last two years 1) prescription drugs are now a lower percentage of national health care spending , 2) a significantly larger share of the prescription drugs prescribed are generics and they make up a significantly larger share of prescription drug expenditures , and 3) generic drugs cost even less now (as compared to their brand-name counterparts).

Full post as published by Antitrust Review on February 05, 2009 (boomark / email).