By Sam Baker - 11/08/11 10:05 PM EST
Restricting “pay-for-delay” agreements would help get generic drugs to market more quickly, CBO said, cutting the cost of prescription drugs for everyone. The budget office said new limits would save the U.S. a total of $11 billion, roughly $4 billion of which would be savings to government programs including Medicare, Medicaid and the healthcare reform law’s subsidies for private insurance.
Kohl tried to get his pay-for-delay bill into the healthcare law through the budget reconciliation process, but it was ruled ineligible because its savings are secondary to a policy change. Kohl and the FTC believe the settlements are anticompetitive.
The agreements are referred to as pay-for-delay settlements because brand-name companies pay generics not to sell their products. The brand-name company can then continue charging higher prices, because it doesn’t have to compete with a cheaper generic version of the same drug. And the brand simply pays the generic a cash settlement, making up for at least some of the money the generic would have made by selling its drug.