North Coast lawmaker Jim Wood unveils bill to stop prescription drug firms from paying rivals to delay generic medicines

State Attorney General Xavier Becerra said such tactics have forced patients to pay as much as 5,000 percent more for some drugs needed daily.|

California could become the first state to stop pharmaceutical companies from delaying generic drug companies from releasing cheaper prescription medicines.

Assemblyman Jim Wood, D-Santa Rosa, unveiled legislation Wednesday that if approved by the state Legislature would make it illegal for drug companies to engage in the tactic of paying generic competitors to delay introduction of less expensive medications that would cut profits for pharmaceutical firms with patents on brand name drugs.

State Attorney General Xavier Becerra, who joined Wood at a press conference in Sacramento, said such “pay-for-delay” practices have forced patients to pay as much as 5,000 percent more for some drugs needed daily, Becerra said.

This bill would help to “reduce drug prices in California, and I have been fighting against the high cost of prescriptions since being elected,” said Wood, who is serving his third term representing the 2nd Assembly District. He’s a dentist and former mayor of Healdsburg.

The legislation comes at a time when politicians in Washington, D.C., and California have accused pharmaceutical companies of manipulating drug prices in order to pocket billions in annual profits. Last month shortly after taking office, Gov. Gavin Newsom signed an executive order to allow the state to negotiate directly with drug makers as a way to cut prices for residents covered by Medi-Cal - the state’s Medicaid coverage - and state employees.

Under federal law, brand drugs are protected by a patent for a set number of years, typically between seven and up to 20, before generic companies can enter the market with similar medicines which reduces prices, according to the Food and Drug Administration.

But brand drug manufacturers have found ways to manipulate federal law and financially benefit for longer than the terms of a patent, officials said. The pay-for-delay practice, as described by Becerra, happens when a drug maker signs a contract with a generic manufacturer and both agree to delay a generic drug from coming on the market for a set time. This enables drug firms to keep selling prescription medicines at higher prices in a noncompetitive market, the attorney general said.

Wood’s legislation presumes these contracts between drug makers would be illegal unless the companies disclose information from their confidential contracts that proves otherwise. Separately, a bill pending in Congress would make such contracts illegal if they delay the release of cheaper generic drugs.

Becerra pointed to the necessity of generic drugs to help consumers save money by referencing an IMS Health Institute report, which found between 2007 and 2016 generic drugs saved the U.S. health care system $1.67 trillion.

During the press conference, Becerra said the pharmaceutical company Bayer is being scrutinized for possible price manipulation of an antibiotic.

“Bayer ... held a patent on a drug set to expire in 2003 but what they did instead was reach a deal with many of its rivals,” Becerra said. “They (Bayer) paid $400 million to keep their generic drugs and competition out of the market for an additional six years.”

Bayer on Wednesday declined requests for comment.

“No pharmaceutical company should be able to game the system,” the attorney general said. “California should not be asked to pay higher for drugs and be robbed of an opportunity to pay for the medications they need in an open and competitive environment.”

A recent study by the Federal Trade Commission concluded pay-for-delay practices by pharmaceutical companies cost consumers $3.5 billion annually in higher prices for medicines.

California passed a law in 2017 that requires drug makers to give notice if they raise prices over a certain amount, but the pharmaceutical industry has challenged the statute in court.

Wendy Young, executive director of the Sonoma County Medical Association, said Wood’s bill looks like a “positive step towards patient access to less expensive prescription drugs and affordable health care in California.”

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