It’s crunch time on Capitol Hill. Before Congress will consider raising the debt ceiling by next week’s deadline, they have insisted on achieving a budget deal that will reduce the federal debt over the long term. Tensions have mounted as President Obama and leading lawmakers have taken turns grandstanding and negotiating. Both parties agree that spending cuts should be part of the budget deal, and some Democrats have expressed willingness to find opportunities for savings in Medicare and Medicaid. But these programs might now be spending less money if one bill on the Senate’s calendar had passed when it was originally introduced.
The bill is the “Preserve Access to Affordable Generics Act,” which would prohibit pharmaceutical companies from paying makers of generic drugs to delay the introduction of their products. The bill describes pay-for-delay settlements as anticompetitive agreements that harm consumers, echoing the words of the Federal Trade Commission (FTC) and 32 state attorneys general. By banning pay-for-delay deals, the act could save consumers, including taxpayers, $3.5 billion per year, said FTC Chairman Jon Leibowitz in a press release.
In 2005, several court decisions permitted these agreements, which postpone the market entry of generic drugs by an average of 17 months longer than settlements that do not include a payment, according to FTC. In response to these decisions, Senator Herb Kohl (D-WI) introduced the act in February 2009.
The Generic Pharmaceutical Association (GPhA) has been a consistent critic of the act ever since. Last week, GPhA said in a press release that pay-for-delay settlements were good for consumers. The group also implied that prohibiting these agreements would hinder the use of safe and affordable medications. But if pay-for-delay deals postpone the market introduction of generic drugs longer than other settlements do, this assertion seems hard justify.
At a time when financial constraints are affecting consumers and the federal government alike, I think Senator Kohl’s bill deserves serious consideration. It is designed to ensure that cost-saving generic drugs are available sooner rather than later, and it would allow companies to present evidence that their agreements are not anticompetitive. In my view, the “Preserve Access to Affordable Generics Act” would ease consumers’ economic concerns without inflicting damage on the pharmaceutical industry.