The United States’ health care system saved $25.5 billion between 2005 and 2012 due to patent settlements that moved generic pharmaceuticals to market in advance of brand-name drugs’ patent expiration date, according to research financed by generic drug manufacturers.
The “Impact of Patent Settlements on Drug Costs: Estimation of Savings” study was released on Tuesday by the IMS Institute for Healthcare Informatics, which studied 33 settlements on behalf of the Generic Pharmaceutical Association.
The generic medicines studied went to market an average of 81 months before the patent expiration dates, the researchers concluded. The federal government reaped about one-third, or $8.3 billion, of settlement-related savings. That’s based on Medicare and Medicaid statistics that pegged the federal government’s share of 2011 U.S. retail drug costs at 32.6 percent.
The study projected an additional $61.7 billion in savings until the patents expire, if the reported trend holds.
The researchers set out to examine the Hatch-Waxman Act, which governs how generic drugs are brought to market. The 1984 law allows companies to file U.S. Food and Drug Administration applications for generic versions of already-approved drugs using bioequivalence studies instead of clinical trials.
“The system is working and it’s working well,” association president and chief executive officer Ralph Neas said during a conference call. “We would say this is one of the more successful laws, one of the most successful approaches.”
Neas hailed the U.S. Supreme Court’s 5-3 ruling last month in Federal Trade Commission v. Actavis. The court adopted a "rule of reason" standard in holding that so-called "pay to delay" deals involving brand-name drug company payments to generic drug manufacturers that delay production of generics do not automatically run afoul of antitrust laws. Instead, the court ruled, the commission could bring cases against individual settlements as anticompetitive.
Neas called the ruling good news despite the prospect of administrative burdens for generic companies defending settlements. Given the study’s findings and the high court ruling, he was optimistic that “the bipartisan majority would oppose any effort to ban or limit any settlements.”
Sheri Qualters can be contacted at firstname.lastname@example.org.