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BWT - Dropped From Health Care Bill
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BWT - Dropped From Health Care Bill


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  • 1. BIOTECH’S MOST RESPECTED NEWS SOURCE FOR 20 YEARS TUESDAY MARCH 30, 2010 BIOWORLD TODAY T H E D A I LY B I O T E C H N O L O G Y N E W S PA P E R ® VOLUME 21, NO. 60 SPECIAL REPRINT Dropped from Health Care Bill, Pay-for-Delay Battle Goes on By Donna Young Washington Editor WASHINGTON – Although the so-called pay-for-delay similar bill sponsored by Sen. Herb Kohl (D-Wis.). But Kohl’s provision was not included in the health reform reconcilia- measure was not included in the Senate’s health reform tion bill, which President Obama plans to sign into law package, and neither version made it into the reconciliation Tuesday, House and Senate sponsors of the bill have vowed package. to pursue passage of the legislation this year. Ashley Glacel, a spokeswoman for the Senate Special But opponents of the legislation are warning that Committee on Aging, chaired by Kohl, said the senator imposing a ban on patent settlements could have negative plans to continue his fight to get the bill passed. impacts on U.S. drug innovation and have broader implica- Timothy Robinson, senior counsel for the House tions, which could even reach into other sectors, such as Energy & Commerce Subcommittee on Commerce Trade the software industry. and Consumer Protection, chaired by Rush, said the House Current law gives the first generic company that suc- bill “remains a priority” for the congressman. cessfully challenges a brand-name drug’s patent an exclu- “We will do what is necessary to continue to tout the sive market for 180 days, during which time no other drug- benefit of that legislation,” he told BioWorld Today. maker can market a product that is a generic version of the While both bills seek to ban pay-for-delay, Robinson innovator drug. noted that the language varies in certain respects, but both When Generic companies challenge a patent, it general- contain presumptions that could be overcome by a propo- ly results in litigation. But some pharmaceutical firms, nent of the deal, he said. eager to end the litigation, have turned to offering settle- Kohl’s bill, as it currently stands, also applies to agree- ment deals to generic drug companies, in which the gener- ments entered into after Nov. 15, 2009 – a date not included ic firm usually agrees to keep its product off the market for in the House version. a certain period of time in exchange for a sum of money – David Farber, a litigator with the Washington law firm hence pay-for-delay. Patton Boggs, argued that the deals are not anticompeti- The Federal Trade Commission (FTC) over the past tive and simply are reasonable negotiations that mitigate decade has called for a ban on such deals, arguing that they litigation. are anticompetitive and a violation of antitrust laws. Farber asserted that the legislation and the FTC’s cost- FTC Chairman Jon Leibowitz has contended that the savings are based on the assumption that the generic chal- settlements restrict competition at the expense of con- lenger would prevail in litigation. sumers. A report from the FTC issued in January showed that Delaying generics drugs’ entry into the marketplace generic companies prevailed in about 73 percent of court under pay-for-delay deals, also known as exclusion pay- decisions from 1992 to 2002. ments or reverse consideration, costs Americans $3.5 But Gil Bashe, vice president in the health practice at billion per year or $35 billion over 10 years, Leibowitz has New York-based Makovsky and Co., contended that generic asserted. companies win in only about 46 percent to 48 percent of Some lawmakers also have argued that under pay-for- patent challenge cases. delay deals, innovator firms and generic drugmakers are “That means the branded companies win 52 percent to essentially keeping a monopoly in place while splitting the 54 percent of those cases, and those products don’t go on profits. the marketplace earlier as generics, they live the full extent Rep. Bobby Rush (D-Ill.) sponsored the House bill, of their patent life,” Bashe said. which was passed as part of that chamber’s health reform “So therefore, any savings to the American public is package last summer. nullified,” he said. The Senate Judiciary Committee last October passed a Litigation is the strategy by which the generic companies ©2010. Reprinted With Permission From BioWorld® Today, Atlanta, Georgia. To subscribe, please call BIOWORLD® Customer Service at (800) 688-2421; outside the U.S. and Canada, call (404) 262-5476. Copyright © 2010 AHC Media LLC. Reproduction is strictly prohibited. Visit our web site at
  • 2. TUESDAY, MARCH 30, 2010 BIOWORLD® TODAY PAGE 2 OF 2 create a “risk-benefit” around the patent and encourage the think you will see investors looking at this industry and branded innovators to resolve through settlements rather saying ‘Is this where I want to put my money?’” he said. than expensive litigation, which could cost as much as $100 Investors are not in love with the biomedical innova- million, Bashe said. tion; they are in love with return on investment,” Bashe Dollars saved on litigation costs, he argued, could said. therefore be spent on research and development of new When venture capitalists, angels investors or banks no medicines for innovators and making generic drugs safer. longer find that the risk-benefit of investment is aligned in “Obviously, these companies are spending huge biomedical innovation, “the risk far outweighs the possible resources on litigation instead of R&D,” Bashe said. benefits and the access to capital will diminish,” he noted. Patent challenges by generic drugmakers also tie up Even all of the “entrepreneurial spirit in the world,” the court system, which he contended was another reason backed by great scientific genius cannot get a product to why pay-for-delays deals should be embraced rather than market without investment, Bashe said. banned. The pay-for-delay legislation also could open a But Bashe said his greatest worry if the restrictions to “Pandora’s Box” that could lead to applications involving patent settlements are adopted is that investment for mid- other industries, such as software and other IT sectors, he sized drugmakers, including many biotechs, could be argued. threatened if investors view such bans as added risks for But a congressional source disputed that assertion, companies. noting that litigation involving drugs is much different than “Once the benefit of resolution is taken off the table the rest of the commercial world of patent infringement and the cost of litigation is added to risk of investment, I cases. ■ To subscribe, please call BIOWORLD® Customer Service at (800) 688-2421; outside the U.S. and Canada, call (404) 262-5476. Copyright © 2010 AHC Media LLC. Reproduction is strictly prohibited. Visit our web site at