SACRAMENTO – Gov. Gavin Newsom in October signed Assembly Bill 824, known as the “Pay-for-Delay” bill, a new law that will block pharmaceutical companies from paying generic drug makers to not develop and bring lower-cost medicines to market.
The Federal Trade Commission (FTC) has stated that the “reverse payment” settlements that stemmed from these issues have cost consumers $3.5 billion a year. AB 824 has been angled to address that issue.
“In 2010, the FTC estimated that a pay-for-delay deal for a single drug could cost an individual consumer and their health plan an extra $4,590 over 17 months,” according to a statement from California Public Interest Research Group (CALPIRG). “Extended over the average five-year length of a pay-for-delay deal, that amounts to $16,200 in wasteful spending per patient, per drug, due to pay for delay.”
“This bill would provide that an agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a pharmaceutical product, is to be presumed to have anticompetitive effects if a nonreference drug filer receives anything of value, as defined, from another company asserting patent,” reads the bill.
It also states that it “would provide various exceptions to this prohibition, including, among others, if the agreement has directly generated procompetitive benefits and the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”
Some legal experts believe that the newly signed bill is going to give Attorney General Xavier Becerra the power that he needs to keep big pharmaceutical corporations in check and lower the overall cost of drugs.
“The big piece of this bill was giving our attorney general the tools that he needs to actually investigate these deals to ensure minimally that they are following the law,” said Emily Rusch, CALPIRG's Oakland Office executive director.
However, opponents of the bill believe that it is only going to add to the already troubling legal climate throughout the state while also clashing with federal law. Rusch doesn’t see it that way.
“Our attorney general, who sponsored the bill, believes he’s on solid legal authority to protect the interests of Californians in this case and that this law was crafted in a way to withstand that scrutiny,” said Rusch.
The bill authorizes the attorney general to seek civil penalties within four years of any violations of the law. Other options would be available under California’s Cartwright Act, Unfair Practices Act or unfair competition laws.