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GPhA: Projected Savings from Patent Settlement Ban Rely on Faulty Assumptions

WASHINGTON, D.C. (NOV. 9, 2011) – The Generic Pharmaceutical Association (GPhA) today released the following statement in response to the Congressional Budget Office’s (CBO) revised cost estimate on S. 27, the Preserve Access to Affordable Generics Act.

“The CBO’s revised score is just the latest in a long line of faulty savings estimates on this legislation,” said Ralph G. Neas, President and CEO of GPhA. “The bottom line is that settlements have never delayed generic market entry beyond the date of the patent expiration, and instead have proven to be pro-competitive and pro-consumer by making lower-cost generics available months and even years before patents have expired.”

GPhA has long maintained that the savings estimates put forward by the CBO and others are based on faulty assumptions. These include the notion that, because of settlements, generic drugs are coming to market at a later date than if a generic manufacturer had challenged a brand company’s patents in court and won the case, thus allowing the generic to enter the market immediately. Evidence has shown, however, that generic companies win such cases less than half of the time they are pursued.

Further, the CBO estimate relies on data provided by the Federal Trade Commission — the leading proponent for a ban on settlements — and ignores the data of independent leading economists such as Jonathan Orszag, Laura Tyson and Bret Dickey, all of whom have found that eliminating settlements would be harmful to consumers.

“The ever-changing cost savings estimates on this bill are indicative of the fundamental lack of understanding of this issue by the very groups pursuing it,” Neas said. “This misguided policy would ban settlements that actually stand to benefit patients and would lead to fewer generic drugs coming to market in a timely fashion.”

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals fill 78 percent of the prescriptions dispensed in the U.S. but consume just 25 percent of the total drug spending. Additional information is available at gphaonline.org.

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