Proposed Act Bans 'Pay-to-Delay' Drug Deals, Targeting Earlier Access to Cheaper Generics and Biosimilars

This proposed legislation, the Preserve Access to Affordable Generics and Biosimilars Act, takes direct aim at a practice that costs consumers billions: the secret deals between brand-name drug makers and generic companies to delay cheaper drug versions from hitting the market. The core idea is simple: stop the anticompetitive agreements that keep drug prices high. Specifically, Section 3 makes it illegal under the Federal Trade Commission (FTC) Act for a brand-name manufacturer to pay a generic or biosimilar company to limit or stop their competition efforts. If this passes, it could significantly change how quickly you see cost savings at the pharmacy counter.

The Anatomy of a “Pay-to-Delay” Deal

For years, brand-name drug companies facing patent challenges have used a specific tactic: instead of fighting the generic company in court and risking a loss, they settle. But here’s the kicker: they pay the generic company a large sum of money or provide some other valuable benefit in exchange for the generic company agreeing to postpone the launch of its cheaper alternative. This is known as a “reverse payment settlement.” The generic company gets paid, the brand-name company keeps its monopoly profits, and consumers are stuck paying full price for months or even years longer than necessary. This bill presumes that any settlement where the generic company gets something of value and agrees to delay launch is harmful to competition, unless the companies can prove the payment was solely for legitimate services or that the deal’s benefits outweigh the anticompetitive harm.

What This Means for Your Wallet

Since generics currently account for 91% of prescriptions but only 18% of total drug spending, getting them to market faster is the fastest way to cut costs. If this bill succeeds, it means when a patent challenge is filed, the companies will be forced to compete or settle in a way that accelerates market entry, not delays it. For a family managing a chronic condition, this could mean the difference between paying $500 a month for a brand-name drug and paying $50 for the generic version months sooner. The law even specifies exceptions for settlements, such as allowing payment for reasonable legal expenses, but caps that amount at $7.5 million (adjusted annually), effectively preventing huge payouts disguised as legal fees.

New Teeth for the FTC and Tougher Penalties

The legislation gives the FTC much clearer enforcement authority (SEC. 7) and serious leverage. If a company is found to have violated the new rules, they face civil penalties up to three times the value they received from the illegal agreement (SEC. 3). This is designed to make the payoff of delaying competition not worth the risk. Furthermore, if a brand-name company violates fair competition rules, the FDA can revoke the 180-day market exclusivity period it grants to the first generic applicant (SEC. 6). This is a heavy hammer, as that exclusivity period is highly valuable, and losing it would incentivize brand-name companies to play by the rules.

Cutting Through the Fine Print

To make sure these deals aren't happening under the table, Section 4 requires the negotiating company official to certify, under penalty of perjury, that the filed agreement represents the entire deal, including every side agreement and verbal commitment. This is a crucial transparency measure aimed at preventing companies from hiding the true nature of their arrangement. The FTC will have six years from the date these certifications are filed to investigate and bring enforcement actions (SEC. 9). While the law is complex, its intent is clear: to restore the competitive balance in the pharmaceutical market, ensuring that consumers benefit from the lower prices that competition is supposed to deliver.