New US Law Requires Reporting Of Biologic, Biosimilar “Pay-for-Delay” Pacts

The Patient Right to Know Drug Prices Act became effective in the United States on 10 October. Among other things, it extends to biologic and biosimilar products a 2003 law requiring drug manufacturers to notify US antitrust authorities of patent settlement agreements. The idea is to cut down on so-called “pay-for delay” tactics which can slow the introduction of cheaper medicines into the market.

The Patient Right to Know Drug Prices Act is here. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) is here.

Under the MMA, drug makers must file with the US Department of Justice Antitrust Division and the Federal Trade Commission (FTC) when they sign agreements concerning the manufacture, marketing or sale of small-molecule drug products, Jones Day attorneys Jonathan Berman, Rosanna McCalips and Julia McEvoy wrote in a 15 October antitrust alert. The FTC has investigated many small-molecule agreements for “pay for delay” settlement tactics, they said.

Such settlements are authorised under the 1984 Hatch-Waxman Act, enacted to address the growing cost of healthcare and the need for continued medical innovation, American University Washington College of Law student Samantha Schram wrote in a 10 March article for the Journal of Gender, Social Policy & the Law.

Hatch-Waxman, which regulates chemical drugs consisting of small, easily identifiable molecules, offers a trade-off for brand-name drugs, she said: In exchange for allowing generic drug makers to rely on safety and efficiency data from the band-name manufacturer to gain Federal Drug Administration approval, the brand receives a period of regulatory exclusivity and patent term extension, a situation which has been credited with cutting the price of drugs to consumers.

Parties to a Hatch-Waxman agreement may settle their patent disputes by agreeing on a date, prior to patent expiration or some other exclusivity period, on which the generic can launch its product, Jones Day said.

If the settlement also involves a payment from the brand to the generic, the FTC might allege that the agreement is an unlawful pay-for-delay accord without which the generic might have reached the market soon, the attorneys wrote. In the June 2013 FTC v. Activis decision [pdf], the US Supreme Court held that such “’reverse payment settlements’ could sometimes fail to pass antitrust muster,” Schram wrote.

Hatch-Waxman, however, did not cover biologics or biosimilars, which will now have to submit the same reports on patent settlements as brand and generic drug makers, Jones Day said. The new law will enable the FTC to discover the terms of biologic/biosimilar settlements under the MMA without having to compel disclosure, “which likely will lead to an uptick in investigations and follow-on enforcement actions,” it said.

The FTC declined to comment.

The fact that biologic product agreements will be treated the same as small-molecule drug settlements is “no surprise” given the strong focus on drug prices and the growing attention from authorities and private litigants to antitrust issues involving biologic drugs, it said.

FTC information and advice on pharma agreement filings is here.

 

Image Credits: Diliff – Wikimedia Commons