Supreme Court to Rule on Pay-to-Delay Arrangements

Published Online: Thursday, April 18, 2013
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On March 25, 2013, the United States Supreme Court heard arguments on “pay-to-delay” arrangements, in which the manufacturer of a branded medication pays another company to keep a generic version off the market. The court’s decision in Federal Trade Commission v Actavis Inc, which is expected in June, could have far- reaching consequences for how much patients pay for medications.

The FTC argues that these payments violate antitrust law because they allow the branded manufacturer to maintain an effective monopoly on the sale of a given medication, forcing consumers to pay more than they would if a generic version were available. Drug manufacturers counter that the agreements save consumers money because they tend to make a generic version of the medication available before its patent is set to expire.

Federal district courts have issued conflicting rulings on these arrangements. In the oral argument, the justices seemed skeptical that the arrangements are legal but also seemed disinclined to declare that they are categorically illegal. Among possible alternative remedies discussed by the justices were allowing district court judges to decide whether the payments pass muster on a case-by-case basis, or capping the allowable size of the payments so that generic companies would not stand to make more from “pay-to-delay” agreements than they would from marketing generic versions of the drugs in question.


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Today Reps. Doug Collins (R-Ga.) and Dave Loebsack (D-Iowa) introduced H.R. 5815, The Generic Drug Pricing Fairness Act, which creates greater transparency in how pharmacy benefit managers reimburse pharmacies for generic prescription drugs under Medicare Part D, and the Federal Employees Health Benefits Program. The National Community Pharmacists Association endorsed the bill, which goes further than legislation the same two Congressmen introduced earlier year that has the same remedies, but only applied to Medicare Part D.
“GPhA applauds FDA for taking helpful steps to address, and hopefully limit, scenarios in which some brand drug companies misuse Risk Evaluation and Mitigation Strategies programs to thwart competition from more affordable generic drugs. The ongoing abuse of REMS and REMS-like programs costs the American health system and its patients $5.4 billion annually, according to a study conducted by Matrix Global Advisors. Interestingly, as the United States market readies for biosimilars, this same study identifies $140 million in lost savings that would occur for every $1 billion in biologics sales.
Generics saved $239 billion in 2013 (a 14% increase in savings from 2012) and more than $1.46 trillion over the recent decade. Further, the Express Scripts 2013 Drug Trend Report issued in 2014 shows that since 2008, the price of brand drugs has almost doubled, but the price of generic drugs has been cut roughly in half.
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