Generic drug trade group praises Obama budget, expresses reservations

WASHINGTON — Generic makers heralded the fiscal year 2014 budget proposed last week by the Obama administration for its embrace of generic drugs, but were critical of its provisions on patent settlements and rebates.

The Generic Pharmaceutical Association, a trade group for the generic drug industry, noted that the budget would encourage increased use of generic drugs and savings from biosimilars, while also proposing prohibiting state-level "carve-out" laws that limit dispensing of generics and increasing Medicaid payments to states that use the cheapest drugs available.

At the same time, the group expressed opposition to the budget's ban on patent settlements between generic and branded drug companies that critics label "pay-for-delay" and allege to cause generic drugs to enter the market later than they otherwise would. But the GPhA said the deals, which involve an agreement in which a generic drug company holds off launching its product in exchange for either a payment from the branded drug company or a promise no to launch the branded drug at a discount as an "authorized generic" in order to compete with the Food and Drug Administration-approved generic, result in drugs getting to consumers months or years ahead of patent expiry anyway, and that the Federal Trade Commission's long-standing opposition to the settlements stems from a 2002 study that the GPhA called "outdated" and "faulty."

The group also opposed increases or extensions of Medicaid rebates beyond what drug makers currently pay, holding up Medicare Part D as an example of cost efficiency and calling for replicating the latter's market-based competition. Such changes to the rebate structure, the GPhA said, would "likely have the unintended consequence of shifting costs onto American consumers purchasing their care in the private marketplace."