Obama health reform plan slaps drugmakers

February 24, 2010

Health insurers aren’t the only companies in the sights of President Obama’s new health reform proposal.

Drugmakers such as Indianapolis-based Eli Lilly and Co. would shoulder an extra $1 billion in fees per year, up from the $2.3 billion they had already agreed to.

Also, Obama’s plan would allow the Federal Trade Commission to ban so-called pay-for-delay deals, in which makers of brand-name drugs pay generic drug companies to drop their patent challenges to brand-name drugs.

There were 66 such deals in the past five years, according to a January report by the FTC. Lilly wasn't named in the report. By extending the life of expensive brand-name drugs, such deals prevent American consumers from enjoying as much as $3.5 billion a year from low-cost generic drugs.

In December 2003, former Lilly CEO Sidney Taurel was quoted as saying that branded drugmakers could “truly eliminate the incentive in the calculation that generic companies would make” by launching their own generic versions of drugs before the generic maker had the chance to capitalize.

The pharmaceutical trade association, of which Lilly is a member, strongly opposes a ban on pay-for-delay deals.

In an earlier statement, it said, “Patent settlements between brand-name and generics companies can resolve expensive patent disputes to help foster innovation and improve access to medicines so that patients can live healthier, more productive lives.”



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