Klobuchar and Grassley Reintroduce Legislation to Address Pay-for-Delay Tactics

Senators Amy Klobuchar (D-Minnesota) and Chuck Grassley (R-Iowa) recently reintroduced bipartisan legislation aimed at bringing down prescription drug costs.

The legislation, now titled “Preserve Access to Affordable Generics and Biosimilars Act,” was first introduced to Congress in January 2017, then titled “Preserve Access to Affordable Generics Act.” The aim of the bill was originally to prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic into the market, an action referred to in the industry as a “pay-for-delay” deal. Since the original introduction of the bill, the aim has expanded to include prohibiting biologics manufacturers from compensating biosimilar developers to delay the entry of competitor products into the market.

“When brand-name, generic, and biologic drug makers enter into agreements to keep more affordable medicines out of the marketplace, all of us are left to pay the price. Competition among drug makers is critical to lowering the price of prescription medications,” said Grassley in a statement. “Generics and biosimilar drugs offer the same benefits as brand name drugs, but often at a lower price. Our bill will curb the anti-competitive pay-for-delay tactics that artificially inflate prices for patients and prevent access to more affordable alternatives.”

The bill is just one in a series of recently introduced items of legislation that seek to address the high cost of prescription drugs. In fact, the legislation is similar to a bill introduced by Congressman John Sarbanes, D-Maryland, in the House of Representatives in July 2018, titled the “Biosimilars Competition Act of 2018,” of which some key components were subsequently passed in September 2018.

Sarbanes’ bill required both biologic and biosimilar developers to report agreements to the Federal Trade Commission (FTC) if they keep lower-cost drugs off the market. According to a 2013 report from the FTC, cited in the introduction of the bill, in 2005, 3 pay-for-delay deals were made between brand name and generic manufacturers. In 2012, that number rose to 40 agreements among brand name and generic manufacturers.

In support of the Biosimilars Competition Act of 2018, the Congressional Budget Office released an unofficial estimate that the Act would save an estimated $100 million from 2019 to 2028. These savings could then help to pay for other bills, such as the “Patient Right to Know Drug Prices Act,” which passed in the Senate in September 2018. The bill eliminated so-called pharmacy “gag clauses,” which are contractual agreements between pharmacy benefit managers and pharmacies that prevent pharmacists from informing consumers if their medication is cheaper to pay for out-of-pocket rather than going through his or her insurance.