Washington, D.C. –Today, House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening statement for the markup of H.R. 2375, the Preserve Access to Affordable Generics and Biosimilars Act:

“H.R. 2375, the ‘Preserve Access to Affordable Generics and Biosimilars Act’ is one of a series of bipartisan measures that we are considering today to address the critical need to lower the soaring cost of prescription drugs, which is jeopardizing the health and well-being of millions of Americans.

“Too many Americans simply cannot afford lifesaving medicines.  Others find their budgets strained to the limit because of the high cost of prescription drugs.  Some patients delay essential care, cut their pills in half, or skip drug treatment altogether, all because of unaffordable drug prices, and their health suffers as a result.

“Several of the bills we are considering today address, in different ways, one of the leading drivers of high prescription drug costs—efforts by branded drug companies to preserve their monopolies by preventing or delaying competition from lower-priced generic and biosimilar drugs.

“The ‘Preserve Access to Affordable Generics and Biosimilars Act’ prohibits one of these outrageous delay tactics, so-called ‘pay-for-delay’ settlement agreements.  These agreements occur when a generic drug maker seeks to enter the market and compete with a brand-name drug product.  Patent litigation ensues and the branded drug firm uses the patent settlement agreement as a vehicle to pay the potential generic competitor to delay entering the market with a lower-cost generic product.  These agreements result in a financial windfall for both drug companies: the brand-name drug company gets to keep its monopoly, and the generic gets paid off with a portion of the monopoly profits.  But consumers inevitably lose. According to a Federal Trade Commission study, pay-for-delay agreements are estimated to cost American consumers $3.5 billion per year—$35 billion over the decade from 2010 to 2020.

“And despite a clear holding by the Supreme Court in the Actavis case, nearly six years ago, that such agreements may be significantly anti-competitive and illegal under the antitrust laws, they still persist today.

“In 2015 alone, there were 14 settlements between branded and generic drug companies that contained potential pay-for-delay provisions, covering 11 branded drugs, totaling $4.6 billion in sales.  And the FTC continues to investigate and challenge potential pay-for-delay agreements that keep affordable generic drugs off the market.

“That is why these anticompetitive practices must be prohibited altogether.  The significance of generic competition on drug prices cannot be overstated. According to the FTC, the first generic competitor’s product is typically offered at a 20% to 30% discount from the branded product’s price. Subsequent generic entry creates massive price discounts, with additional competition reducing the cost of prescription drugs by as much as 85% or more off the brand price.

“To help ensure that these generic alternatives can enter the market, this bill would establish that certain pay-for-delay agreements are presumptively anti-competitive, and would authorize the FTC to initiate an enforcement proceeding against parties to such an agreement involving the sale of a drug or biological product.

“Importantly, the Preserve Access to Generics and Biosimilars Act also includes safe harbors that preserve the incentives of generic and biosimilar competitors to challenge weak patents and enter the market as early as possible. This legislation builds on the Committee’s strong tradition of bipartisan work to lower the cost of prescription drugs through the full benefits of competition. This Committee has been—and will continue to be—active in stopping drug companies from reaping monopoly profits at the expense of the health of American consumers.

“I am proud of this important work to provide meaningful relief to Americans who struggle every day with the high costs of prescription medicine, along with other outrageous healthcare costs.  I thank Ranking Member Collins for his leadership on this issue, and I urge my colleagues to support this legislation.”

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