Law and justice concept

California Governor Got it Wrong on Pay-for-Delay!

While California is usually a very progressive state, I believe that Governor Newsom did not quite understand the implications of the bill he signed into law banning pay-for delay patent settlements.  I believe he failed to see that not all pay-for-delay cases are anticompetitive.  According to the Association of Accessible Medicines (AAM) statement about the bill:

“As the Federal Trade Commission has found, recent patent litigation settlements have overwhelmingly accelerated the launch of more affordable generic and biosimilar medicines prior to the branded drug’s patent expiration date.

Increased competition from generics and biosimilars break up drug monopolies and drive down the cost of medicine.  California patients and state programs saved $26 billion in 2018 alone by using generic prescription drugs.

AB 824 will harm patients in California by denying them earlier access to affordable generic and biosimilar prescriptions drugs.  Moreover, by attempting to regulate federal patents and transactions that occur wholly in other states, the law violates the U.S. Constitution.”

I agree wholeheartedly with AAM’s position as many of these cases actually do bring generic medicines into the hands of patients years before the patents on the brand name drug expire.  Take a case (won’t tell you the drug) where a generic firm agreed to drop litigation (a process that is costly for both brand and generic companies – and guess who ultimately pays for that) in turn for a series of concessions from the brand name company (including a payment) but the brand company in turn permitted the generic company to bring the generic product to market 5 years before patent expiry.  Had the brand and generic companies continued litigation and the brand won its patent case, then there would have been no generic for an additional 5 years.  We have previously blogged about this and other pay-for-delay issues here, here, and here.

The bottom line is that each case needs to be looked at on its own merit and the benefit to consumers should, in my opinion, be a substantive issue considered in the court’s decision-making process.  A blanket policy banning such practices will lead to higher prices and less access to generic drugs.