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Change laws to stop pharma ‘pay for delay’ deals say economists

Systemic change is needed to stop pharmaceutical companies paying off rivals to keep cheaper generic drugs out of the market, academics at the University of East Anglia have warned.

The UEA researchers’ study, published in the Journal of Economics & Management Strategy, looks at how drug manufacturers in Europe and the US use loopholes to pay or ward off rival companies “by threatening to launch an authorised generic via the first paid-off challenger”.

The authors recommend that in order to prevent ‘pay for delay’ deals, which can cost consumers and health systems millions by allowing companies to charge “monopoly prices” for longer, countries should adopt new systems that reward “the first successful challenger” to a patent.

Dr Farasat Bokhari of UEA’s School of Economics and Centre for Competition Policy said: “While pay-for-delay deals may be beneficial to some extent, in that they might save courts and administrative bodies such as patent offices’ time and effort, they allow branded drug firms to charge monopoly prices and in a typical deal there may be several years’ delay in a cheaper version becoming available.

“Investigation and fines can be important in deterring such deals. However, the more important policy question is what can be done to prevent such entry limiting agreements in the first place.

“It is important that the branded firms’ ability to launch authorised generics can be legislatively limited.”

In recent years the UK Competition and Markets Authority (CMA) has pursued a number of cases in which one company has allegedly broken competition laws by giving another manufacturer a payout to defer the market entry of a generic medicine.

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