New economic analysis shows US FTC and CBO erred in projecting savings from patent settlement ban

The US Congressional Budget Office has forecast nearly $2 billion in savings over 10 years if patent settlements, or pay-for-delay deals between originator drugmakers and generics companies were banned, and a Federal Trade Commission study that estimated savings of $3.5 billion annually. These findings are now questioned.

In late July, the US Senate Committee on Appropriations approved the inclusion of the 'Preserve Access to Affordable Generics Act' in the report accompanying the Fiscal Year 2011 Financial Services and General Government Appropriations Bill (S 3677; The Pharma Letters passim). Under the pending legislation (as in S 369), a violation can lead to 'a civil penalty of not more than three times the gross revenue of the New Drug Aplication holder from sales of the drug that is the subject of the patent infringement claim for the period of the violation, starting with the date of the agreement.'

However, a new study claims the CBO report 'is flawed and likely substantially overestimates the budgetary savings,' and also claims that restrictions may have the opposite effect of speeding generic copies to the market.