Whoa– a piece of health care reform news out of Washington that has nothing to do with the bill coming of the Senate Finance Committee last week. From Gooznews:
The Senate Judiciary Committee today passed legislation prohibiting brand name drug manufacturers from paying off generic manufacturers in patent disputes. [The generics] get the money in exchange for not bringing the cheaper drug to market. The Federal Trade Commission estimated ending this anti-competitive practice would raise $35 billion over ten years. Sen. Susan Collins, a Republican from Maine, is listed as a co-sponsor.
Why isn’t this in the health care reform bill?
Pay for Delay
We covered these “pay for delay” deals a while ago- it’s one of several ways drug companies get around patent law. Both brand name drug makers and generics oppose this new legislation, which is unsurprising since both sides make a ton of money in these settlements. For example in one case, a brand-name company paid a generic company $4.5 million a month to delay competing for six months—and during that time the brand was expected to generate $185 million in sales.
Keep in mind that the Judiciary Committee is just one step. You know the drill- now the bill moves on to the floor of the Senate, so look for the entire pharmaceutical industry- branded drug makers and generics- to lobby against it. And if there’s one thing that the drug industry is good at it’s lobbying. They have over 1,200 registered lobbyists, and in the first six months of this year alone, spent $609,000 a day to influence lawmakers.
Big Pharma Deal
About that last question from GoozNews- why isn’t this in the health care reform bill? It might have something to do with the deal that the White House and the Senate Finance Committee cut with PhRMA, the pharmaceutical lobbyists. Back in June, the White House and Finance Committee announced that drug companies had agreed to lower costs $80 billion over ten years and chip in something like $150 million worth of television commercials pushing for health reform. What was NOT announced, however, was what the drug companies got in return.
Details are sketchy, but it looks like the White House agreed not to push for anything that would save more money than what the drug companies voluntarily agreed to. So things like allowing Medicare to negotiate for bulk pricing on prescription drugs or importing cheaper drugs from Canada- which could save way more then $80 billion- are off the table. Or at least for now. The White House has clarified it’s position a little, and said that Congress can vote to do these things- just not under the health care reform bill.
This new bill banning pay for delay agreements would also push drug savings past $80 billion over ten years. That might explain why it’s a separate piece of legislation, and not included with the rest of the health care reform bill.