osewalrus (osewalrus) wrote,

House Approps To Block Pay for Delay

Had missed this earlier, but the House approps bill passed before July recess includes a provision that would prohibit one of my favorite patent abuse schemes.

For those who don't click through, "pay for delay" works like this. Primary patent on NameBrand drug expires. However, as is the case in most drugs these days, various other elements of the drug as sold under the name brand may remain under patent (e.g., the enteric coating). GenericCo makes generic version of drug. NameBrand sues, claiming that GenericCo infringed on components still under patent. The parties then settle. Under the terms of the settlement NameBrand pays to GenericCo (the supposed infringer) a huge sum of money and Generico agrees to sit out of the market for some period of years.

When this first started happening, the Federal Trade Commission tried to block such settlements as blatant efforts to circumvent antitrust law and allow NameBrand to pay potential competitors not to compete. The Second Circuit rejected the FTC's claim, finding that there are many possible reasons parties might come up with such settlements. Since then, no surprise, "pay to delay" has become very popular in the pharmaceuticals world.

Apparently, the House approp/temporary supplemental contains a provision that would find such settlements presumptively illegal, but the parties could seek to overcome the presumption in court. Hopefully, this will make it through the Senate. It is estimated to save the U.S. government about $2.5 billion in reduced drug costs. Multiply that over all consumers and it would save us all a nice chunk of change.

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