Sec. 2. Congressional findings and declaration of purposes

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Congress finds the following: In 1984, the Drug Price Competition and Patent Term Restoration Act ( Public Law 98–417 ) (referred to in this Act as the 1984 Act ), was enacted with the intent of facilitating the early entry of generic drugs while preserving incentives for innovation. Prescription drugs make up 10 percent of the national health care spending but for the past decade have been one of the fastest growing segments of health care expenditures. Until recently, the 1984 Act was successful in facilitating generic competition to the benefit of consumers and health care payers—although 67 percent of all prescriptions dispensed in the United States are generic drugs, they account for only 20 percent of all expenditures.

Generic drugs cost substantially less than brand name drugs, with discounts off the brand price sometimes exceeding 90 percent. Federal dollars currently account for an estimated 35 percent of the $263,000,000,000 spent on prescription drugs, and this share is expected to rise to 42 percent by 2021. In recent years, the intent of the 1984 Act has been subverted by certain settlement agreements between brand companies and their potential generic competitors that make reverse payments which are payments by the brand company to the generic company.

These settlement agreements have unduly delayed the marketing of low-cost generic drugs contrary to free competition, the interests of consumers, and the principles underlying antitrust law. Because of the price disparity between brand name and generic drugs, such agreements are more profitable for both the brand and generic manufacturers than competition, and will become increasingly common unless prohibited. These agreements result in consumers losing the benefits that the 1984 Act was intended to provide.

The purposes of this Act are— to enhance competition in the pharmaceutical market by stopping anticompetitive agreements between brand name and generic drug manufacturers that limit, delay, or otherwise prevent competition from generic drugs; and to support the purpose and intent of antitrust law by prohibiting anticompetitive practices in the pharmaceutical industry that harm consumers.

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Pub. L. 98-417

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Sec. 2

Congressional findings and declaration of purposes

Pub. L.Pub. L. 98-417

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