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Effort to Curb Pay-to-Delay Generics Gets House Vote

Janice Simmons, for HealthLeaders Media, July 7, 2010

The federal government's decade-long quest to limit drug manufacturers' abilities to keep generic medicines off the market for a specified time—through deals called "pay-to-delay"—took a new turn last week when the House approved an amendment to the War Funding Bill (HR 4899) intended to curb such practices.

Restrictions on "pay-to-delay" were included in the initial House healthcare reform approved last year and in President Obama's healthcare reform proposal this year, where it was portrayed as a cost-saving measure. It was excluded, however, in the final Senate bill—and the subsequent healthcare reform law—passed in March.

But attention since then has been refocused on pay-to-delay in the courts. This spring, the U.S. Second Circuit Court of Appeals in New York upheld the legality of Bayer AG to pay a potential generic competitor, Barr Pharmaceuticals, to delay the introduction of Cipro, a popular antibiotic.

In an unusual move, the court—saying that its hands were tied on the issue by a previous ruling on the drug Tamoxifen— "invited" the plaintiffs in the case (including retail pharmacies CVS and Rite Aid) to petition for a rehearing by the full appeals court.

Following the court case, Federal Trade Commission (FTC) Chairman Jon Leibowitz said, "This is further evidence that courts are rethinking their approach to pay-for-delay settlements."

According to Leibowitz, FTC economists have estimated that deals between brand name and generic drug companies were costing consumers about $3.5 billion a year by delaying consumers' access to lower-cost generic drugs. "Congress has taken a critical step towards ending a practice that is dramatically increasing the cost of prescription drugs," he said after the House action.

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