Lesson One: President Obama's Plan To End "Pay For Delay"

Just last night, I warned that pharmaceutical manufacturers were approaching a "bright yellow danger-zone" -- where the confluence of rule-bending, opponent bullying and excessive profiteering of the last two decades would put the industry in the President's crosshairs, for new, broad and corrective legislative solutions. This morning, President Obama's plan does just that -- at page 7 of this PDF.

I think the sea change I've been predicting repeatedly since Novemeber of 2008 is arriving in earnest, this morning -- and pharma stock prices on the NYSE are showing the real effects of it:

. . . .Preventing Delays in Access to Generic Drugs.

Currently, brand-name pharmaceutical companies can delay generic competition through agreements whereby they pay the generic company to keep its drug off the market for a period of time, called "pay-for-delay." This hurts consumers by delaying their access to generic drugs, which are usually less expensive than their branded counterparts. The Federal Trade Commission (FTC) recently estimated that this could cost consumers $35 billion over 10 years. The President's proposal adopts a provision from the bipartisan legislation that gives the FTC enforcement authority to address this problem.

Specifically, it makes anti-competitive and unlawful any agreement in which a generic drug manufacturer receives anything of value from a brand-name drug manufacturer that contains a provision in which the generic drug manufacturer agrees to limit or forego research, development, marketing, manufacturing or sales of the generic drug. This presumption can only be overcome if the parties to such an agreement demonstrate by clear and convincing evidence that the pro-competitive benefits of the agreement outweigh the anti-competitive effects of the agreement. The proposal also requires the Chief Executive Officer of the branded pharmaceutical company to certify to the accuracy and completeness of any agreements required to be filed with the FTC. . . .

This presumption of unlawfulness already appears in the Senate version, though in a slightly altered fashion from the President's language. It also varies from, but dovetails with the DoJ's currently renewed focus on prosecuting the authors of such collusive agreements -- by conferring important new evidentiary shifts, in favor of the DoJ's cases, on a prospective basis.

Atta' boy, PhRMA (under Billy Tauzin's "leadership", in particular) -- "doin' a heckuva' job," here! Next up? Reimportation, I bet.