The state of California is once again taking progressive ideas to the next level.
California Gov. Gavin Newsom signed a new bill this week that will make California the first state to completely ban pay-for-delay deals in the pharmaceutical industry.
Pay-for-delay deals are how drug companies stifle competitions from lower-cost generic medicines by offering to pay patent settlements to generic companies in return for them not to bring lower-cost drugs to the market.
According to an FTC study, pay-for-delay deals cost American taxpayers $.35 billion in higher drug costs every year.
AB 824 in California makes it illegal for Big Pharma companies to exchange anything of value in exchange for a half to patent challenges. Pay-for-delay deals in California will now be considered anti-competitive and open to civil litigation.
“California will use our market power and our moral power to take on big drug companies and prevent them from keeping affordable generic drugs out of the hands of people who need them,” said Newsom in a statement.
The FTC has been fighting against pay-for-delay deals via numerous lawsuits since 2013, when a Supreme Court decision reversed a circuit court’s ruling that shielded Big Pharma companies from lawsuits challenging their patent deals.
Since 2013 pay-for-delay deals have declined, reports the FTC. But companies are still finding ways to delay Americans’ access to cheaper, generic drugs.
The FTC has been successful in several lawsuits against drug companies and their pay-for-delay deals. Just this year a federal judge approved a $65.8 million settlement with Teva’s Cephalon and five plaintiffs over the company incentivizing challengers to keep cheaper versions of the narcolepsy drug Provigil off the market. Shortly after, Endo Pharmaceuticals agreed to a $2.3 million settlement to 18 states for paying a competitor to keep a generic version of a pain relief drug, Lidoderm, off the market.
“Competition in the pharmaceutical industry helps lower prices for Californians who rely on life-saving treatments,” said Newsom.
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