Earlier this month, the White House released its proposed budget for Fiscal Year 2014. While the White House’s budget plan includes some Medicare benefit cuts, such as raising premiums for Part B and Part D, it includes some policy proposals to help lower drug costs for consumers and the government that we at Community Catalyst support, including a ban on “pay-for-delay” deals between brand-name and generic pharmaceutical companies. Obama’s April 10 proposal, “Reducing the Deficit in a Smart and Balanced Way”, reasons that restricting pay-for-delay agreements would “increase the availability of generic drugs and biologics” and deliver $11 billion in savings to federal health programs over the next 10 years.

Pay-for-delay settlements are agreements in which the brand name drugmaker pays a generic company to delay bringing a generic drug to market. A ban on these agreements would improve patient access to affordable, generic versions of necessary pharmaceuticals while lowering health care costs. Federal Trade Commission Chairman Jon Leibowitz praises proposals to ban pay-for-delay deals, noting they would “reduce the deficit by billions of dollars without raising taxes or cutting critical programs.”

Despite this fiscal wisdom, all of the House and Senate bills proposed to stop this anticompetitive behavior have failed. If Obama’s 2014 budget proposal is enacted, it will bolster the FTC’s ability to investigate and intervene in these companies’ shady back-room dealings. We hope that would inspire Congress to finally pass the Preserve Access to Affordable Generics Act, putting a stop to these deals, once and for all.

While the White House budget doesn’t address how to reimburse the billions of dollars that have already been unfairly taken from consumers and taxpayers, it serves as a symbolic victory highlighting the Administration’s awareness that pay-for-delay deals cost us all, whether as consumers or as tax payers. A case about the legality of pay-for-delay is pending before the Supreme Court (as we have discussed here), with a decision expected by June. Whether Congress, the Administration or the Supreme Court does it, it’s now abundantly clear that our government must take action to stop these deals. As Arthur and Zachary Kaplan explain in their CNN opinion post, “the right prescription for making medicines cheaper and better is to encourage competition, not stifle it with backroom deals where everyone gets a great deal except for the patients.”

Additionally, the Administration recommends reforms to save another $3 billion, by preventing companies from making small changes in a biologic drug and using them to delay competing versions (often called ‘evergreening’) and by making it possible for companies to begin making “biosimilar” (generic) versions of these very expensive biologic drugs five years earlier.

Overall the Administration’s prescription drug recommendations emphasize the importance of ensuring prescription are more affordable for consumers. We at Community Catalyst are glad to see these vital proposals recommended and are hopeful they will be enacted to benefit consumers.

— Khadijah M. Britton, Program and Policy Associate Prescription Access and Quality Project