As Congress focuses on how to drive down drug prices, there is bipartisan support for prohibiting reverse payment agreements, also known as “pay-for-delay” arrangements. These arrangements involve a brand-name pharmaceutical manufacturer paying one or more potential generic competitors to delay bringing a generic to market as part of a resolution to a patent infringement lawsuit. Although lawmakers have talked about the issue for over a decade, the House Energy and Commerce Committee and the House Judiciary reported legislation prohibiting these arrangements as part of a larger drug package considered by the House of Representatives. The legislation passed 234-183, by recorded vote.

  • The House Energy and Commerce Committee passed by voice vote H.R 1499, the “Protecting Consumer Access to Generic Drugs Act of 2019.” The legislation, introduced by Rep. Bobby Rush (D-Ill.), also passed the House Energy and Commerce Committee and House Judiciary Committee by voice votes.
  • Lawmakers struck the most controversial aspect of the proposal — allowing enforcement retroactively to June 17, 2013 — during the full Energy and Commerce Committee’s consideration of the bill. During subcommittee consideration, Republicans had voted against this proposal because of its retroactive nature, saying they would support the bill if the retroactivity were removed. A bipartisan amendment arose during the full committee markup to eliminate the retroactive portion of the bill and to provide the Federal Trade Commission (FTC) with flexibility to enforce arrangements that the FTC felt would be anti-competitive or bad for consumers. That amendment passed on a voice vote.
  • Sens. Amy Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) introduced similar legislation in the Senate. Bill S. 64, “The Preserve Access to Affordable Generics and Biosimilars Act,” was referred to the Senate Judiciary Committee, of which both are members. Klobuchar and Grassley introduced similar legislation in the last Congress. This year’s legislation is cosponsored by Sens. Patrick Leahy (D-Vt.), Joni Ernst (R-Iowa) and Kevin Cramer (R-N.D.).
  • The May 16 vote by the full House of Representatives is just the first package of bills to be considered. The Energy and Commerce Committee is preparing another bipartisan package, and the speaker of the House is developing legislation concerning drug negotiations.

What appears evident is that some kind of “pay for delay” legislation is likely to advance through Congress and become law in the near future. Pharma companies, investors, lenders and other interested parties should follow this legislation closely because of its potential impact on the competitive risks associated with new drug development, and pay particular attention to how such legislation treats retroactive application of prior “pay for delay” arrangements. This topic is likely to evolve and elicit much debate for the foreseeable future, including how retroactivity might be applied to existing arrangements among competing branded and generic pharma companies.