Generic Drugs : The Pay-for-Delay Problem.

Intro -- Library of Congress Cataloging-in-Publication Data -- Contents -- Preface -- Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions -- Summary -- Recommendation -- Background -- Findings from Pharmaceutical Agreement Filings from FY2004 through FY2009 -- Study Methodology -- How Staff Calculated the Additional Delay in Generic Entry Associated with Agreements that Involved Compensation from the Brand to the Generic -- How Staff Calculated the Estimate of 3.5 Billion Annually that Consumers Lose due to Pay-For-Delay Agreements -- (1) Consumer savings from generic competition -- (2) Likelihood of Settlements with Payment to Delay, and the Length of Delay -- (3) Sales Volume of Drugs for which Settlements are Likely -- (4) Final Estimate Calculation -- Results with Varied Assumptions -- End Notes -- "Pay-for-Delay" Settlements in the Pharmaceutical Industry: How Congress Can Stop Anticompetitive Conduct, Protect Consumers' Wallets, and Help Pay for Health Care Reform (The 35 Billion Solution) -- A Brief History -- New FTC Analysis of Empirical Data -- Savings to Consumers and the Federal Government -- Encouraging Signs -- Looking Forward -- Appendix: Calculation of Consumer Savings -- Consumer Savings from Generic Competition -- Likelihood of Settlements with Payment to Delay, and the Length of Delay -- Sales Volume of Drugs for which Settlements are Likely -- Final Estimate Calculation -- Results with Varied Assumptions -- End Notes -- Statement of the Federal Trade Commission, before the Subcommittee on Courts and43 -- Competition Policy, Hearing on "Anticompetitive Pay-for-Delay Settlements in the Pharmaceutical Industry: Why Consumers and the Federal Government are Paying Too Much for Prescription Drugs" -- I. The Need for a Legislative Solution.

A. Permissive Court Decisions have Made Pay-for-Delay Settlements Commonplace in Hatch-Waxman Patent Cases -- B. The Profitability of Delaying Generic Entry Means that these Agreements will become More Prevalent -- C. Pay-For-Delay Settlements Impose Enormous Costs on Consumers and the Health Care System -- D. Permissive Legal Treatment of Pay-for-Delay Settlements Undermines the Hatch-Waxman Act -- E. Legislation is Likely to be Swifter and More Comprehensive than Litigation -- II. The Arguments against Barring Exclusion Payments Are Contradicted by Experience in the Market -- III. The Legislative Remedy -- Conclusion -- End Notes -- Testimony of Heather Bresch, Chief Operating Officer, Mylan, Inc., before the Subcommittee on Courts and Competition Policy, Hearing on "Pay to Delay: Are Patent Settlements that Delay Generic Drug Market Entry Anticompetitive?" -- A Brief History of Hatch-Waxman -- Authorized Generics -- Patent Settlements -- Testimony of Bret M. Dickey, Senior Vice President, Compass Lexecon, before the Subcommittee on Courts and Competition Policy, Hearing on "Pay to Delay: Are Patent Settlements that Delay Generic Drug Market Entry Anticompetitive?" -- Appendix. An Economic Assessment of Patent Settlements in the Pharmaceutical Industry -- Executive Summary -- Introduction -- I. Competition in the Pharmaceutical Industry -- A. Innovation and Patent Protection -- B. Generic Competition -- C. The Hatch-Waxman Amendments -- 1. Introduction -- 2. FDA approval prior to Hatch-Waxman -- 3. Overview of Hatch-Waxman -- 4. Patent litigation under Hatch-Waxman -- D. Patent Litigation and Settlement Agreements -- II. Competitive Effects of Patent Settlements: Short-Run -- A. Overview -- 1. Patent settlements reduce the direct and indirect costs of litigation -- 2. Patent settlements have the potential to be anticompetitive.

B. Economic Framework -- 1. Basic Model -- 2. Litigation costs -- 3. Risk aversion -- 4. Information asymmetries -- III. Competitive Effects of Reverse Payment Settlements: Short-Run -- A. Overview -- B. Regulatory and Judicial Enforcement -- 1. History -- 2. Current status -- C. "Reverse Payment" and "Exclusion Payments" Are Misnomers -- D. Basic Economic Model -- E. Introducing Real-World Complexities to the Basic Model60 -- 1. Overview -- 2. Cash payments with litigation costs and/or risk aversion -- 3. Cash payments with a cash-strapped generic -- 4. Cash payments with an optimistic generic -- 5. Cash payments with information asymmetries -- 6. Collateral business agreements -- IV. Long-Run Competitive Effects -- V. Policy Implications and Conclusions -- End Notes -- Statement of Guy Donatiello, Endo Pharmaceuticals Inc., before the Subcommittee on Courts and Competition Policy, Hearing on "Pay to Delay: Are Patent Settlements that Delay Generic Drug Market Entry Anticompetitive?" -- Statement of William P. (Bill) Kennedy, Co-Owner, Nephron Pharmaceuticals Corporation, before the U.S. House of Representatives, Hearing on "H.R. 1706, the Protecting Consumer Access to Generic Drugs Act of 2009" -- Company Profile -- Introduction -- The Challenge -- The Position of Nephron Pharmaceuticals Corporation on H.R. 1706 -- Nephron's Recommendation for H.R. 1706 -- End Notes -- Testimony of William Vaughan, Senior Health Analyst, Consumers Union, Non-Profit Publisher of Consumer Reports, before the Subcommittee on Courts and Competition Policy, Hearing on "Pay to Delay: Are Patent Settlements that Delay Generic Drug Market E... -- Rapid Entry of Generic Drugs Can Help Dampen High Health Care Costs Now, Assisting Families and Governments in a Difficult Time -- High Costs Impact Familie -- Costs of Drugs Impact Governments and Taxpayers.

Generics Dramatically Lower Costs -- Many Generics about to Enter Market -- The Dynamics of Generic Drug Competition Create Powerful Incentives for Brand-Name and Generic Companies to Settle Patent Litigation in A Way that Thwarts the Objectives of the Hatch-Waxman Act -- Other Legislative Suggestions to Help Speed Generic Entry -- Finding Other Ways to Help Consumers Hold Down Drug Costs While Promoting Drug Innovation -- Appendix #1 -- Best Buy Drug Campaign -- Appendix #2 -- The Hatch-Waxman Act Exacerbates the Incentive to Settle Patent Litigation with Compensation Paid to the Generic Applicant -- These Settlements Are Contrary to the Purpose of the Hatch-Waxman Act -- Experience Shows that Brand-Name Companies and Generic Applicants Do Not Need to Use Payments for Delay to Settle Patent Litigation -- The Courts are Unlikely to Provide Timely Relief to Consumers -- End Notes -- Chapter Sources -- Index -- Blank Page.

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