A recent study (funded by PhRMA) suggests that the savings from a proposed ban on “reverse payment” were “significantly overstated.” In particular, the study says both the Congressional Budget Office (CBO) and the Federal Trade Commission (FTC) were wrong to assume that banning reverse payments would speed up generic entry into the marketplace by 17 months. The study does a preliminary economic analysis of the “pay-for-delay” legislation limiting generic drugmakers ability to accept money to settle patent disputes.
The study attacks the basic assumptions made by the CBO that had proposed the ban and where the CBO had concluded that enacting S. 369 would accelerate, on average, the availability of lower-priced generic drugs and generate savings to public/private purchasers of prescription drugs.
Dear Mr. Choudhry:
July 21, 2010 I posted on my blog regarding the subject. It might be of interest. The link is http://pharmachemicalscoatings.blogspot.com/2010/07/pharmaceutical-reverse-payments-and.html.
The study might be more persuasive if it were not funded by big pharma. Also, I find it rather disingenuous to imply that reverse payment settlements are the only alternative to protracted patent litigation. In fact, I suspect that some patents may be litigated merely because generic manufacturers are hoping to pressure brand manufacturers into pay-for-delay settlements. If so, ending reverse payments might even reduce patent litigation, since generics would no longer have such a strong incentive to sue.