Another Attempt to Discourage Pay-For-Delay Agreements

In an era in which governments are attempting to move legal disputes out of the courtroom and encouraging mediation wherever possible, it is unusual to see a Bill which would prevent companies from settling legal disputes.  Yet, that is exactly what the “Protecting Consumer Access to Generic Drugs Act of 2012” (H.R. 3995) proposes to do.  This Bill, introduced into the US Congress on 9 February 2012, represents the latest attempt to put a stop to pay-for-delay agreements.  For more information about these agreements, see our post of 1 June 2011 here

The new Bill provides that it is “unlawful for any person to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which:

(1)   an [Abbreviated New Drug Application (“ANDA”)] filer receives anything of value; and

(2)   the ANDA filer agrees not to research, develop, manufacture, market, or sell, for any period of time, the drug that is to be manufactured under the ANDA involved and is the subject of the patent infringement claim.”

If passed into law, the new Bill would:

  • require any person in breach of the law to pay a civil penalty;
  • permit injunctive relief against any person in breach of the prohibition;
  • require agreements to be filed with the Department of Justice and the Federal Trade Commission (“FTC”);
  • grant the FTC power to enforce the new law;
  • deny any ANDA filer found to be in violation of the law the 180-day exclusivity period currently granted to the first generic company to file an ANDA; and
  • grant the FTC power to exempt agreements from the prohibition where they are “in furtherance of market competition and for the benefit of consumers”.

Introduction of the Bill has reignited the debate between those who oppose pay-for-delay agreements on the basis that they make drugs more expensive for the community, and those who argue that pay-for-delay settlement agreements save generic companies the cost of challenging patent protection, permitting those resources to be redirected to research and innovation.

The Bill has been referred to the House Judiciary Committee, as well as the House Energy and Commerce Committee.  We will be following its progress through Congress and keep you updated on developments.

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