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Patent Settlements

GPhA Position

GPhA vigorously opposes restricting the right of parties in drug patent litigation to settle their disputes out of court. Settling patent cases cuts short lengthy court trials with potential appeals and guarantees that lower cost generic versions of name brand drugs come to market before patents expire. Banning settlements would force companies to continue drawn-out litigation until a court handed down its decision and then allow generic market entry only if the generic company wins the case. Over the past 12 years, generics have won less than 50 percent of the patent cases. The bottom line is clear and convincing: settlements guarantee savings for consumers, the government and healthcare providers; limiting settlements risks these savings by betting that the generic company will always win the patent suit. GPhA is committed to preserving current law, which allows companies to settle patent litigation out of court.

Key Points
  • Restricting drug patent settlements is not the answer to assuring that consumers are guaranteed the earliest possible access to safe and affordable generic medicines.
  • By banning patent settlements merely because they contains some form of consideration in addition to early generic entry, Congress would be unfairly preventing drug companies from settling legitimate patent disputes and would be harming consumers and patients. 
  • Settlements provide a guaranteed way of ensuring generic market entry prior to patent expiration.  The “delay” ban proponents talk about is only a potential for delay beyond some hypothetical date that might exist if the patent litigation continues to its conclusion, and if the generic company wins. But over the past decade, generic companies have won less that 50 percent of patent cases.
  • Under the Medicare Modernization Act, generic and brand companies are required to submit all patent settlement data to both the Federal Trade Commission (FTC) and Department of Justice (DOJ) for their review. Both FTC and DOJ are authorized to disallow or request changes to settlements deemed to be anticompetitive. Current law is doing an excellent job in policing settlements.
  • Restricting the right of parties to settle litigation would have the unintended consequence of reducing the number of patent challenges brought by generic companies. This would work contrary to federal law that incentivizes generic companies to contest weak or potentially unenforceable patents and provide consumers access to lower cost generic drugs as soon as possible.
  • While there are no examples of patent litigation settlements that delayed generic market formation beyond the date of the patent expiration, there are numerous examples of settlements that have proven to be pro-consumer and pro-competitive by saving consumers, taxpayers and the health care system billions of dollars every year. 
  • Over the past 30 years, generic manufacturers have undertaken hundreds of patent challenges, generating tens of billions of dollars in savings for consumers, patients, the government and other healthcare providers. Only a small number of these challenges have involved litigation settlements between the brand and generic companies.

GPhA Efforts

  • GPhA will release in 2013 an Economic Impact Study showing that a restriction on settlements would significantly weaken the incentive for a generic manufacturer to invest in a patent challenge.

  • GPhA is preparing a Settlement Savings Report that will use IMS data to compute actual savings made possible by a settlement during the early launch period (the period between generic entry and patent expiration). 

  • GPhA will release in 2013 White Papers on the legal and public policy arguments supporting patent litigation settlements. 

  • GPhA has testified numerous times before Congress about the unintended consequences of banning or restricting patent ligation settlements.

  • GPhA has made available to lawmakers and policymakers policy briefs and White Papers documenting the consumer benefits of patent settlements.


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