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!

Prescription Access Litigation (PAL) coalition member National Women’s Health Network and MergerWatch, which is also part of PAL’s parent organization, Community Catalyst, announce an important national conference coming up on April 17 and 18 in Boston, MA:

RAISING WOMEN’S VOICES FOR THE HEALTH CARE WE NEED!
National Conference – Simmons College, Boston
April 17 & 18

To get the health care debate to reflect women’s issues and concerns, we must join the conversation!

Dynamic conference workshops will prepare you to talk about:

• Why reproductive health must be included in health reform
• Why dependent health insurance is a women’s Issue
• How health care must become culturally competent
• What kinds of childbirth choices women want to see included
• What are the health concerns of older women
• How can we better support women who are providing care at home for elderly relatives

Learn valuable lessons from advocates in states like Massachusetts that have been experimenting with health care reform:

• How you can use personal stories to advocate for health reform
• How you can do effective grassroots organizing
• How to build a health reform law based on existing models
• How to decide on things like whether to require individuals to purchase health insurance
• How you can work with the progressive faith community in your state to advocate for health care for all

For more info, go raisingwomensvoices.net

Raising Women’s Voices for the Health Care We Need is a joint project of
The Avery Institute for Social Change
National Women’s Health Network
MergerWatch Project

Questions? Give us a call! 866-210-3114 or email us at
info@raisingwomensvoices.net

One of our goals here at the Prescription Access Litigation Blog is to highlight the good work being done by members of PAL’s coalition of 130+ organizations. Below is an July 22 editorial from the Santa Rosa Press Democrat, written by Shirlee Zane, CEO of the Council on Aging of Sonoma County (CA). The Council on Aging is a member of the PAL Coalition. To see the original article, click here.

Universal health care is a moral necessity
By SHIRLEE ZANE

Shirlee Zane is a Santa Rosa resident and the chief executive officer of the Council on Aging.;
During my recent visit to the Lake District in England, my father-in-law, George Kingston, hiked up a 1,000-foot hill and hiked five miles around a lake on a rugged, swampy trail. He is almost 88 years old, and I have been watching him age for the past few years. I have been able to do my own independent study of health and aging in the United Kingdom through my numerous trips to England.

Universal health care was adopted in England when the World War II veterans came home wounded and insisted on it. When Margaret Thatcher came into power, she virtually undid almost all of the government programs with the exception of the National Health System. She knew she would be quickly voted out of office if she touched it.

I have been a believer in universal health care for more than 10 years. I believe we have come to a point in our history as a nation when we simply can’t afford to not have it. Lives are at stake, and the underlying values of the medical profession are being eroded so that the self interests of industry profits can be satisfied.
Every day across the United States men, women and children experience health care crises. With 40 million people without even basic health care insurance, these crises often lead to homelessness, bankruptcy and loss of home ownership. The material losses simply cannot measure the emotional losses and stress that accompany them: depression, anxiety, despair and sometimes suicide.
Ten years ago, when Hilary Clinton tried to restructure health care, about 40 percent of Americans believed we needed a national health care program. Today that figure has risen to more than 70 percent of Americans. We simply are no longer buying the myth that socialized medicine is bad for us, because the facts bear otherwise.
A report in 2000 by the World Health Organization put the United States 37th out of 190 nations in health care services. The 36 countries that have lower infant mortality and greater longevity all have one thing in common: They have a form of universal health care. This ranking of the United States also explodes the myth that we have the best medical care in the world.

The only universal health care program we have, Medicare, is now being privatized; it is being financially tapped by private HMOs and the pharmaceutical industry through the Medicare Prescription Drug Plan. Medicare has less than 2 percent overhead, but our current system of private insurance has 25 percent to 30 percent overhead. It is no surprise that we pay more for health care than any other country in the world with that kind of obscene profit margin.

Another “myth” that has long been circulated is the myth of waiting for procedures. A recent study demonstrated that if you have a serious disease, such as cancer, you will wait longer for surgery in the United States than you will for surgery in Canada. The wait for elective surgeries in Canada is longer, but then again, those are not life-threatening.

My father-in-law, who has spent a lot of time in the United States, once commented that he and his late wife thought Americans lived in a great deal of fear over whether they’d lose their jobs, health care or housing. Universal health care does more than assure health care for all, it also addresses the stress levels of the millions of people who live in fear that a medical crisis will destroy them financially.

We’ve long talked about the importance of “prevention in health care.” One of my observations of the English is that the National Health System encourages prevention and better health habits, such as walking and maintaining a healthy weight. My father-in-law frequently walks around his village on the hilly narrow roads. He also played a weekly nine holes of golf, walking the course, until a year ago.

Both the French and the English drink and smoke a great deal more than Americans but have much better overall health and live longer. Could this be because they have national health care?

Health care in a civilized society should be a right. It should be about people and not about profit. Our system that is largely based on profit is immoral when you consider that financial gain is being valued over lives of human beings. We must insist that our elected officials stop trying to please the health care industries and their lust for higher profit margins. We must demand affordable, accessible care for all so we can age with kindness, respect and without the dark cloud of fear that a medical crisis will destroy us.