The last year has been a roller coaster-ride of both successes and set-backs in the fight to eliminate pay-for delay settlements. These multi-million dollar sweetheart deals have been used more and more by brand-named drug makers to get their generic competitors to agree to delay bringing affordable generics to the market.

A bill to ban these agreements was included in the House’s health care reform proposal last fall, and a similar measure was supported by the White House and considered by the Senate. Unfortunately, the Senate’s procedural and jurisdictional rules kept the measure from being included in the national health reform bill enacted in March.

Undeterred, leaders in the House then included the measure in an appropriations bill approved on July 1^st. But the Senate passed one appropriations bill on July 22 without the provision. In the aftermath of this setback, consumer champion Senator Herb Kohl (D-WI) and others succeeded in including this vital reform as an amendment to the FTC’s budget authorization. Kohl and others then  overcame the next major hurdle yesterday, narrowly stopping  drug industry lobbyist efforts to strip the measure in the Senate Appropriations Committee.

Yesterday’s vote was a dramatic one.  Senator Arlen Specter (D-PA) introduced an amendment to remove the pay-for-delay provision from the Committee bill. When four Democrats voted with Specter  to strip away the pay-for-delay provision, the AP reports that:

“Drug company lobbyists in the audience thought they had the vote won, provided they could win over every panel Republican. But Sen. Richard Shelby, R-Ala., voted against the drug companies, helping give Kohl and Durbin [the author of the Appropriations Bill] a surprise win.”

Recent settlements shielding $9 Billion in drug spending from generic competition

The Federal Trade Commission (FTC), which has consistently challenged these anti-competitive agreements in the courts and through testimonies before Congress, called yesterday’s vote a significant victory. FTC chairman Jon Leibowitz testified before Congress earlier this week that these types of pay-for-delay agreements, which delay the entry of generic drugs, are becoming more common (see graph). Legal decisions permitting these agreements have led to their proliferation from none in 2004 to a former high of 19 such agreements in 2009. The FTC notes that in just the first 9 months, the number of pay-for-delay settlements in fiscal year 2010 has already topped last year’s record high.

Graph: Federal Trade Commission

The FTC’s preliminary analysis of the agreement filed this fiscal year concludes that 21 pay-for-delay agreements entered into this year are protecting $9 billion in prescription drug sales from generic competition. Combined with the earlier agreements in effect, this could mean that as much as $29 billion in annual spending on drugs are improperly shielded from generic challengers.  That is a significant loss of possible savings.  The FTC estimates (conservatively, in our opinion) that these settlements are costing consumers and our health system at least $3.5 billion a year.

FTC has continued to raise the alarm about these settlements, and their effect upon consumers. In a press release coinciding with testimony before Congress, FTC Chairman Jon Leibowitz summed it up:

“That’s almost an epidemic,” Chairman Leibowitz said, “and left untreated, these types of settlements will continue to insulate more and more drugs from competition. Every single FTC Commissioner, going back through the Bush and Clinton administrations, has supported stopping these unconscionable agreements.”

On the legal front, PAL continues to support efforts to do away will these settlements. PAL and AFSCME District Council 37 filed an amicus brief in May in support of the Second Circuit’s reconsideration of the legality of these agreements in the Cipro litigation. And the PAL-member lawsuit challenging the pay-for-delay settlements concerning Provigil continues.

FTC Chairman Leibowitz testified that some of these recent events, such as the Second Circuits Cipro decision and the fact that the House has already passed a ban on these settlements, gives him “reason to believe that the tide may be turning, both in the courts and in Congress.” Yet, Chairman Leibowitz wisely cautioned that bringing about such a reform through the Courts will take time, which means that  “legislation would be the most effective way to stop these deals.”

Thus the successful Senate Committee vote yesterday “means that consumers are one step closer to saving billions on their prescription drugs” according to Leibowitz.  And help can’t come too soon.  The bill’s Senate sponsor, Senator Herb Kohl, points out why:

“The cost of brand-named drugs rose nearly ten percent last year. In contrast, the cost of generic drugs fell by nearly ten percent. At this time of spiraling health care costs, we cannot turn a blind eye to these anticompetitive backroom deals that deny consumers access to affordable generic drugs.”

We view yesterday’s decision as a crucial step  to put legislation in place to end these agreements and foster consumer access to affordable generic drugs.

Help reverse the medical device “tort reform” by the Supreme Court that has left thousands of injured patients without the right to sue, and puts many more patients at risk! 

The following announcement and open letter to Congress was organized by the Campaign to Stop Corporate Immunity, a coalition of consumer and advocacy organizations (including PAL, Community Catalyst, AARP, Consumers Union, and many others) working to restore patient’s rights to sue manufacturers when they are harmed by dangerous or defective medical devices.

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Medical Device Patient Lobby Day

On March 31st, Medical Device Patients from around the country will travel to Washington, DC and ask Congress to pass the Medical Device Safety Act.  Please click here to learn more about the Faces of Preemption.  Following is the Patients’ Letter to Congress:

Dear Members of Congress,

Because we have had a defective medical device implanted in our bodies, we are here today asking Congress to support HR 1346/S 540, the Medical Device Safety Act.

In February of 2008, the Supreme Court decided that medical device manufacturers cannot be held accountable for producing dangerous and defective products. They felt that FDA’s approval of a medical device warranted this immunity. It should not. The Medical Device Safety Act will return our rights that have been taken away by fixing this problem and putting the law back the way it was just over a year ago.

Most of us here today have received a Medtronic Implanted Cardiac Defibrillator (ICD) that had a defective Sprint Fidelis lead attaching it to our hearts.   This lead has malfunctioned causing patients like us to suffer unnecessary shocks that can only be compared to getting kicked in the chest by a horse.

While these are meant to be life saving devices, some of us are here representing loved ones who lost their lives as a direct result of their defects. Medtronic knew this lead was faulty and failed to report problems to the FDA.  As a result, hundreds of the defective leads were implanted in heart patients across the country. This was all before they had immunity from lawsuits!  Imagine how reckless they will be with out the checks and balances of our civil justice system. 

If we cannot hold medical device manufacturers accountable for their actions, we cannot pay for our medical care, a cost that will fall to taxpayers. Why should Americans have to finance the medical device industry?

Please, consider us when it comes time to vote on the Medical Device Safety Act, and vote YES for patient safety.

SUPPORT HR 1346/S 540, THE MEDICAL DEVICE SAFETY ACT 

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Additional information:

This legislation is needed not only to restore the rights of current patients who have been harmed, but also to safeguard for the safety of future patients who use any prescription medical device. The right to sue manufacturers of faulty or dangerous medical devices helps ensure that manufacturers develop and produce safer devices. For instance, earlier this month, in the case Wyeth v Levine (related to the safety of prescription drugs) the Supreme Court noted that:

State tort suits uncover unknown drug hazards and provide incentives for drug manufacturers to disclose safety risks promptly. They also serve a distinct compensatory function that may motivate injured persons to come forward with information. Failure-to-warn actions, in particular, lend force to the FDCA’s premise that manufacturers, not the FDA, bear primary responsibility for their drug labeling at all times. Thus, the FDA long maintained that state law offers an additional, and important, layer of consumer protection that complements FDA regulation.

Unfortunately the regulation of medical devices by FDA involves some slightly different federal statutes than those related to prescription drugs. Back in the late 70′s, consumers were being harmed by newly available medical devices, and the states had started to regulate.  In this context, Congress enacted the Medical Device Amendments of 1976 in order to create a unified national system of device labeling under federal law. They did so by expressly preempting, or nullifying labeling requirements imposed under state law.

Gradually over the next twenty years, corporations starting broadly asserting federal regulatory law to get immunity from state law consumer protection and product liability statutes. Corporations exploited many such federal laws as a back-door method to achieve a judicial form of “tort reform” which Congress had long denied them.

You may wonder how federal labeling requirements could affect state laws related to product safety? The ‘reasoning’ goes like this. To win a lawsuit, oftentimes a consumer must prove to a jury that the manufacturer of a product failed to provide adequate warnings that would allow the product to be used safely. A jury verdict is a decision, as a matter of law, that a warning was not adequate. Nearly all warnings are contained in the labeling of the product’s packaging. So a jury decision on the adequacy of a warning is regulation of product labeling under state law. Therefore, such jury verdicts concerning medical devices must be preempted by the superior federal laws enacted in 1976.

So, despite a rather clear intent by Congress to preempt state regulation of what a medical device label must disclose, federal court judges started to buy these ‘preemption’ arguments over twenty years later. Then, in February of 2008, the Supreme Court agreed with this reasoning in the case Riegel v. Medtronic (see our blog here). The Court ruled that consumer claims addressing the adequacy of medical device labeling were preempted.

The current Medical Device Safety Act (HR 1346 in the House, S 540 in the Senate) would simply reverse the decision in Riegel v. Medtronic, and narrow, or limit the preemption under federal law to just the regulation of device labeling, and to restore the rights of patients to sue a device manufacturer when they are harmed.  

To help, follow the link below, and urge your Congressperson and both your U.S. Senators to vote for the Medical Device Safety Act, and reverse the tort reform decided by the Supreme Court in Riegel v Medtronic.

Contact your Congressperson here: https://writerep.house.gov/writerep/welcome.shtml

Contact your Senators here: http://www.senate.gov/general/contact_information/senators_cfm.cfm

To help your organization sign on in support of this legislation, please contact PAL at PAL@communitycatalyst.org.

For more information, go to the Campaign to Stop Corporate Immunity website.

AP reported on August 17 that the Pharmaceutical Research and Manufacturers of America (PhRMA) spent $10.7 million in the first half of 2007 to lobby the federal government. PhRMA is headed by the former member of Congress, Billy Tauzin. While in office, Rep. Tauzin was one of the main proponents of the passage of the legislation that created Medicare Part D, which is widely regarded as an enormous giveaway to the pharmaceutical industry.

Pharmaceutical companies and their trade groups spend large amounts on federal lobbying. The Center for Public Integrity issued a report in April 2007 documenting that they “spent a record $155 million lobbying the federal government and its agencies from January 2005 to June 2006.” The Center had previously reported that “since 1998, the top 20 drug companies, their subsidiaries and two industry trade groups have spent more than $650 million on lobbying. During this same time period, the industry’s top trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), spent $104 million on lobbying.”

In addition, donations in 2006 to federal political candidates from PACs and individuals associated with pharmaceutical companies exceeded $19 million. Since 1990, the industry has donated more than $139 million to federal candidates.

It is hardly surprising, given this largesse, that Congress and federal agencies are so obliging of PhRMA and so frequently adhere to its agenda. It has been more than 2 1/2 years since Vioxx was withdrawn from the market, yet no meaningful reform of drug safety has yet been enacted.

Until Congress weans itself off of drug company cash, no significant changes to how prescription drugs are reviewed, approved, monitored, advertised or priced is likely to be forthcoming.

Here’s the AP story:

Drug trade group spent $10.7M lobbying

Aug. 17, 2007

WASHINGTON (AP) – The Pharmaceutical Research and Manufacturers of America spent $10.7 million in the first half of 2007 to lobby the federal government, according to a disclosure form.

The group, known as PhRMA, lobbied on issues related to Medicare, patent reform, international trade and drug fees, importation and safety, according to the form posted online Tuesday by the Senate’s public records office.

The group — whose members include Amgen Inc. (NASDAQ:AMGN) , Eli Lilly & Co. (NYSE:LLY) and Pfizer Inc. (NYSE:PFE) — lobbied Congress, the Food and Drug Administration, the Health and Human Services Department, the Centers for Medicare and Medicaid and other agencies.

Former Louisiana Rep. Billy Tauzin, who is PhRMA’s president and chief executive, is also a registered lobbyist for the group.

PhRMA’s other registered lobbyists include: Mimi Kneuer, who was Tauzin’s former chief of staff, Amy Efantis, former legislative director for Rep. Artur Davis, D-Ala., Valerie Jewett, former legislative director for Rep. Rodney Frelinghuysen, R-N.J., and Matt Sulkala, who was senior legislative assistant to Rep. Allen Boyd, D-Fla.

Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying.