Archive for the ‘amicus briefs’ Category
Monday, March 25th, 2013
Today, the U.S. Supreme Court heard oral arguments in a lawsuit about a drug company’s ability to pay a competitor to keep a generic drug off the market—so-called “pay-for-delay” settlements. Unfortunately, most of the arguments dealt with how corporations do business, and not how these deals affect consumers. Nevertheless, Justices Elena Kagan and Sonia Sotomayor both acknowledged the potential for consumer harm. We at Community Catalyst think this decision will affect the affordability of prescription drugs for millions of Americans.
What is the lawsuit about?
The lawsuit, Federal Trade Commission (FTC) v. Actavis (informally referred to as “The Androgel Case”), is the government’s challenge to what former FTC Chairman Jon Leibowitz has called “an epidemic” of brand name drug companies paying competitors to delay launching a new generic version of a brand name drug. According to annual reports by the FTC, 165 of these secret deals have blocked generic versions of 140 different brand name drugs.
Delaying competition from generics is the highest priority for brand name drug makers trying to hold on to their profits. A decade ago, brand name drug makers would file one patent infringement lawsuit after another, to delay a generic as long as possible. But Congress put a stop to this in late 2003, requiring all patent challenges be brought at the same time.
So the brand name drug industry shifted to a new tactic – paying their competitors to delay generics. Under anti-trust law, paying off your competitors is clearly prohibited. But the drug companies have muddied the waters by dragging patent litigation into their dealings.
Unfortunately, the incentive for drug companies to collude is enormous because these pay-for-delay agreements are a win-win for brand name and generic manufacturers. Brand name companies continue to charge high prices and make billions or hundreds of millions on their blockbuster drugs, while the generic company is paid from these high profits to put their generic drug aside and do nothing.
The all too clear losers are consumers, who miss out on the chance for lower-priced generics, or who are forced to pay higher premiums to cover all the health plan members who do take an affected drug.
Delaying generic versions of a drug has serious financial and health impacts on individual patients.
A 2010 FTC report estimates when a pay-for-delay agreement affects just one drug, it can cost each consumer, and his or her health insurer, an extra $4,500 over a year and a half. If the consumer takes more than one drug, the costs could be inflated by $9,000 during the same time period.
For instance, Provigil’s manufacturer, Cephalon Corporation, paid $136 million to four different generic drug companies, who then agreed not to sell a generic version of Provigil for six years. During that time, Cephalon made more than $3.1 billion on Provigil sales. While the drug companies profited, consumers were devastated as the price of Provigil skyrocketed from $300 a month in 2007 to more than $1,000 per month in 2010. As a result, Cephalon was sued by the FTC and class-action attorneys on behalf of consumers.
Indirectly, all our health care premiums and other health care costs have also gone up because pay-for-delay deals have forced our health plans to pay up to ten times as much for a brand-name drug that has no generic. For example, brand-name drugs like Lipitor and Plavix cost more than $200 a month, but their generics versions cost less than $20. Many suspect pay-for-delay deals blocked generic Lipitor and Plavix for several years, while consumers and health plans wasted billions on these two best-selling blockbuster drugs.
The FTC, the U.S. Department of Justice, Attorneys-General in 36 states and consumer advocates have all asked the court to end this practice and allow the nation’s antitrust laws to do their job to restore competition and help lower prices.
The Prescription Access Litigation project at Community Catalyst has helped consumers and insurers file class action lawsuits to challenge pay-for-delay deals that have blocked consumer’s access to affordable generic versions of the drugs Provigil, Cipro, Oxycontin, K-Dur, and Tamoxifen. We have also helped dozens of consumer advocacy, senior, labor and patient groups join legal briefs or support reforms in Congress.
For more information on Pay-for-delay agreements, go here. To tell us ‘Your Story’ about one of these drugs, or any other drug you cannot afford, go here.
Wednesday, September 8th, 2010
Second Circuit takes a pass on reviewing the legality of pay-for-delay settlements
A negative court decision before the Second Circuit this week underscores the importance of passing federal legislation to ban ‘pay-for-delay’ settlements in order to preserve access to affordable, quality prescription drug benefits. At issue is the drug industry practice of paying off generic competitors of expensive brand-name drugs to delay access to low-cost generics. See our earlier blogs here and here.
On Tuesday, the Second Circuit issued a decision on the legality of pay-for-delay settlements concerning the drug Cipro that dealt a blow to consumer advocates and consumer protection attorneys challenging these collusive agreements in court. The decision rebuffed the Federal Trade Commission, the Department of Justice, and a group of State Attorneys-General, all of whom asked the Court to re-evaluate an earlier precedent from 2005 that allowed such ‘pay-for-delay’ settlements.
While the attorneys ponder whether to appeal the case to the Supreme Court, the importance of a legislative solution to this problem becomes even more clear.
Current legislation before the U.S. Senate proposed by Senators Herb Kohl (D-WI) and Richard Durbin (D-IL) would create a presumption that any drug patent settlement that exchanges a payment in return for an agreement to delay bringing a generic to the market is a violation of anti-trust law. The bill gives the FTC the tools to challenge such settlements. However, it still allows the drug companies to prove that a settlement is not a collusive agreement, but a legitimate effort to avoid the time and costs of litigation.
Why is a ban on pay-for-delay settlements important? Since 2005, Congress has responded to concerns about potential collusion by requiring the drug industry to file any settlement of patent litigation concerning a generic drug under seal with the FTC. Since 2004, the FTC has reviewed these settlements, and found that an increasing number of ‘pay-for-delay’ sweetheart deals have been made since the courts started to allow them in 2005. Last fiscal year, a record 19 such pay-for-delay deals were made. By the nine month mark of this fiscal year on June 30, the record was broken, with 21 new pay-for-delay settlements.
These settlements have prevented billions of dollars in possible savings, by preventing generic drugs from being available. At a time when consumer advocacy groups like AARP are documenting exhorbitant price increases for brand-name drugs, generic drugs are the best solution. Another recent report found that every 2% increase in generic use saves Medicaid $1 billion a year.
The FTC, which reviews these agreements, reported in January 2010 that $20 billion dollars in annual brand-name drug spending was being insulated from generic competition by pay-for-delay sweetheart deals. Then, in July, the FTC reported that new pay-for-delay deals were shielding another $9 billion in drug spending from market competition.
How does this impact consumers? The FTC reports that pay-for-delay settlements keep a generic drug off the market for an average of 17 months. The FTC estimates that being forced to take a brand-name drug costing $300 per month, instead of a generic costing $30, would increase a consumer’s health cost by $4,590 over that 17-month period. Drugs that cost more, or that have longer delays, will cost even more.
If a robust, competitive market is to play a role in our new health care system, shielding nearly ten percent of all annual brand-name drug sales from market competition will only allow drug company price increases to continue depleting more and more of our health care resources, while putting more patient care at risk.
In a brief filed with the court, the AMA and AARP described having access to a generic drug improves the quality of patient care:
The price of a brand drug can be prohibitive for uninsured patients who do not have help covering the cost of their prescription drugs. Even for those patients who are insured but who are on fixed or limited incomes, having a generic option is often the difference between having access to a health care treatment and not having any treatment option at all.
And the lawsuit filed by PAL member AFSCME District Council 37in 2006 is challenging the pay-for-delay settlements concerning the drug Provigil, used to treat narcolepsy. This lawsuit has revealed how the lack of competition reduces patients’ quality of life or quality of care when an insurance company refuses to pay for a high-cost brand-name drug. A pastor from Ohio reports that after
paying almost $17,000 in annual premiums for my family [health insurance plan, l] ast year, I was paying around $650/month [for Provigil. I]t now costs me $852/month. That is out of pocket money I have to come up with until later in the year when I reach my deductable and I can enjoy a few months of only paying $60/month. I cannot describe to you how much stress and difficulty this has caused for me and my family the last several years. As you can imagine, with my income, I often cannot afford to refill my prescription. I often take 1/2 or 3/4 of my dosage on days I know I won’t be driving much so I can delay getting a refill. But I do a lot of driving for my work, so I am forced to spend lots of money I don’t have just so I can be safe driving.
To find out how you can support legislation to prevent these pay-for-delay settlements, please contact us!
Friday, July 30th, 2010
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 1st. 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.
Friday, May 28th, 2010
A surprising decision in the Second Circuit has breathed new life into legal efforts to prevent drug makers from paying to keep generics off the market.
Since 2005, the drug industry has increasingly used multi-million dollar ‘pay-for-delay’ settlements to prevent generic drugs from coming to the market. The PAL coalition has opposed this industry collusion with lawsuits on Provigil, Tamoxifen, and Cipro, and through our support for legislation (introduced by Rep. Rush and Sen. Kohl). The FTC has also been a steadfast opponent of these anti-competitive agreements and their negative impacts on consumers. Unfortunately, the ability of FTC or PAL members to challenge these settlements in the courts has been hampered by a number of unfavorable legal decisions.
The Second Circuit’s Cipro Decision
The Second Circuit’s April 29th ruling did dismiss the challenge to the ‘pay-for-delay’ settlements totaling $398 million that have prevented a generic version of Cipro from coming to the market. But the Court did so begrudgingly, and then invited the folks bringing the lawsuit to ask the Second Circuit to revisit the question of whether these settlements are legal under anti-trust protections. Even more surprising, the Court then spelled out why.
In their decision, the three judge panel stated that a review of the binding precedent established under Tamoxifen by the full nine-judge panel for the Second Circuit (called an ‘en banc review’) may be appropriate for four reasons: First, the Court said that United States Department of Justice has urged a review of this decision saying that “Tamoxifen adopted an improper standard that fails to subject reverse exclusionary payment settlements to appropriate antitrust scrutiny.” Second, the Court found that “there is evidence that the practice of entering into reverse exclusionary payment settlements has increased since we decided Tamoxifen.” Third, the panel stated that “after Tamoxifenwas decided, a principal drafter of the Hatch-Waxman Act criticized the settlement practice at issue.” Finally, the Court noted that the Tamoxifen decision was based in no small part on the now erroneous understanding that a pay-for-delay settlement with the first generic competitor would not prevent other generic competitors from attempting to followand file suit.
The 2005 Tamoxifen decision by the Second Circuit Court of Appeals (which covers New York, Vermont, Connecticut) dismissed an FTC order challenging a pay-for-delay settlement. The Tamoxifen Court ruled the practice legal under anti-trust law, because the settlement provided drug maker AstraZeneca with no more protection from generic competition than their patent already did.
This Tamoxifen decision, along with the Eleventh Circuit’s Schering-Plough decision in 2005, and Federal Circuit’s 2008 Cipro decision, have been mounting obstacles to consumer and FTC efforts to oppose these settlements. Only the Sixth Circuit, in its 2002 Cardizem decision, has held that such agreements to “eliminate competition” are a “per se illegal restraint on trade.”
When the Appeals Courts from different US Circuits arrive at differing legal standards, the US Supreme Court should resolve this inconsistency, or ‘split’ between the Courts. Indeed, the PAL-member lawsuits concerning Cipro and Tamoxifen asked the Supreme Court to do just that, as has the FTC. So far, all of these requests have been denied. But a possible reversal in the Second Circuit might change things.
Consumers, legal and medical experts, and the Administration all file briefs in opposition to continued legality of pay-for-delay settlements
Amicus briefs in support of the request for a reconsideration of the Tamoxifen standard were filed by PAL and PAL coalition member AFSCME DC37; AARP, AMA, and the Public Patent Foundation; Consumers Union, US Pirg, Consumer Federation of America, and the National Legislative Associaton on Prescription Drug Prices. Also filing briefs were the American Antitrust Institute, the FTC, and the Department of Justice’s Anti-Trust division.
The amicus brief for the Department of Justice argues that ”by shielding most private reverse settlement agreements from antitrust liability, the Tamoxifen standard improperly undermines the balance Congress struck in the Patent Act between the public interest in encouraging innovation and the public interest in competition.”
The amicus brief from the Federal Trade Commission (FTC) added three additional reasons to those stated by the Second Circuit panel. FTC argued that the Tamoxifen standard gives drug companies an improper incentive to pay off generic drug manufacturers and protect even the weakest patents.
Next, FTC noted that the number of pay-for-delay settlements had grown since 2005, to now insulate “at least $20 billion in sales of branded drugs from generic competition.”
The FTC estimates (very conservatively in our opinion) that these settlements will continue to cost $3.5 billion a year by delaying competition from lower-priced generics, but warned that these costs may grow.
The amicus brief submitted by PAL and PAL member AFSCME District Council 37pointed out that these settlements have cost consumers and health plans $12 billion or more each year in lost savings on generic drugs, and the costs are likely to increase as brand-name drug prices go up (as they did by 9.2 % in the year ending on March 31, 2010) while generic drug prices decline (as they did by 9.7 % during this time period.) Aside from the effect that higher costs have on reducing access to needed medicines, PAL pointed out how these settlements threaten to reduce the quality of care for consumers by limiting the drug options available to them. PAL pointed out that consumers of the drug Provigil, which is protected from generic competition by a pay-for-delay settlement, end up entering the donut hole faster and paying huge sums out of pocket when their health plans refuse to cover the drug due to its high cost.
AARP, the AMA, and the Public Patent Foundation filed a brief arguing that these settlements threaten our health care system because they undermine consumer access to generic drugs, which have, on the whole, “saved consumers over $734 billion in the last 10 years.” AARP noted that “[e]ven for those patients who are insured but who are on fixed or limited incomes, having a generic option is often the difference between having access to health care treatment and not having any treatment option at all.”
AARP’s brief warned that the Tamoxifen precedent will have long-term negative consequences on the well being of consumers because “when a generic pharmaceutical’s entry into the market is delayed, it limits treatment access to vulnerable patient populations and prolongs the difficulty that physicians have in prescribing affordable treatment options.”
An amicus brief filed by Consumers Union, Consumer Federation of America, U.S. PIRG and National Legislative Association of Prescription Drug Prices pointed out that the Tamoxifen decision allows the pay-for-delay settlements that “prevents patent challenges” which is contrary to the purpose of the Hatch-Waxman Act to “encourage patent challenges…..”
The American Antitrust Institute filed an amicus brief highlighting the anticompetitive nature of these settlements, and the Attorney Generals from 34 States filed an amicus noting that “the Cipro case is also of exceptional importance because the United States Supreme Court has refused to review the split between the Sixth and Eleventh Circuits.”
Industry use of these pay-for-delay settlements has driven up costs and prevented access to needed medicines for millions of consumers. This industry practice has prevented or delayed generic versions of the drugs Cipro, Provigil, Androgel, and many other drugs that amount to $20 billion of our nation’s current $278 billion in drug spending, according to the FTC.
PAL, Community Catalyst, and dozens of PAL coalition members have opposed these settlements through lawsuits and legislative advocacy. Please contact us if you would like to join in our work to oppose these anti-competitive settlements.
— by Emily Cutrell and Wells Wilkinson
Friday, August 15th, 2008
Wyeth v. Levine, a case being heard by the Supreme Court in November, has been in the news a lot lately. The case concerns the injuries suffered by Diana Levine, a professional musician in Vermont who Wyeth [NYSE:WYE] nausea medication called Phenergan in a visit to the emergency room. The drug was given incorrectly, causing her to lose her right arm below the elbow. She sued Wyeth, arguing that Wyeth’s warning in its FDA-approved labelling for the drug was insufficient.
A Vermont state court jury awarded her $6 million, and Wyeth appealed, all the way to the Vermont State Supreme Court, which sided with Levine. Wyeth argued that Levine’s state law personal injury and failure-to-warn claims should be “preempted” by the FDA’s authority to regulate the labels of prescription drugs. Since their argument is based on federal law, on which the U.S. Supreme Court is the ultimate authority, they were able to appeal the decision to the Supreme Court.
We frequently get on our soapbox here at the PAL blog on the topic of preemption – to see our previous posts on this subject, go here.
Earlier this year, the Supreme Court ruled in Riegel v. Medtronic that state law claims concerning medical devices are preempted, by the federal Medical Device Amendments. However, that decision does not mean that the Court will necessarily rule the same way in the Wyeth case, since they concern two different federal laws — and the Medical Device Amendments specifically address preemption, while the Food Drug and Cosmetics Act (FDCA) does not. (PAL joined an amicus brief in that case too, arguing against preemption).
The issue is hardly academic. If Wyeth prevails, injured consumers will be all but precluded from suing drug companies when they are injured by unsafe drugs. The FDA’s authority to approve prescription drugs and their labels will stand as a shield to liability — and therefore to accountability. Given that the drug safety scandals of the past four years have underscored the FDA’s inability and unwillingness to do its job, this should scare the daylights anyone who ever takes a pill. It is part of a larger attack on consumers’ access to the Courts by industries that seek to avoid responsibility when they harm, deceive, injure and even kill consumers through carelessness and greed. Preemption, as some like to say, is the new tort reform.
Prescription Access Litigation has joined an amicus curiae (“friend of the Court”) brief in the case, supporting Diana Levine and arguing against preemption. The brief was written by AARP, and is also joined by the National Women’s Health Network, a member of the PAL coalition.
To read the AARP/PAL/NWHN amicus brief, go here.
And Ed Silverman, of Pharmalot, has helpfully compiled most of the other amicus briefs that have been filed:
“Here are the briefs filed by the 47 state attorneys general; the former FDA commissioners; constitutional scholars; Senior Citizens League; National Conference of State Legislatures; New England Journal of Medicine editors; the California Medical Association; AARP; consumer activists; trial lawyers’ association; members of Congress; various unions; various economists and various tort law professors.
And if this isn’t enough, you can sift through Levine’s brief, an interview with Levine, the Wyeth brief and the brief filed by the US Solicitor General. And if you look here, you can read friend-of-the-court briefs filed earlier by PhRMA, BIO, the General Pharmaceutical Association, the US Chamber of Commerce, the American Enterprise Institute and the Washington Legal Foundation in support of preemption.”