US Senate bill aims to end deals that slow generics
Last Updated: 2007-01-17 12:07:46 -0400 (Reuters Health)
By Peter Kaplan
WASHINGTON (Reuters) - The chairman of the Senate Judiciary Committee said on Wednesday he will introduce legislation to prevent drugmakers from striking deals that restrict the introduction of cheaper generic drugs.
The bill planned by Sen. Patrick Leahy, a Vermont Democrat, targets an increasingly common tactic used by brand-name drug makers - legal settlements that involve payments to generic rivals to restrict the sale of generic alternatives.
Leahy said the bill is supported by several other senators, including Republican Charles Grassley of Iowa.
"Congress never intended brand-name drug companies to be able to pay off generic companies not to produce generic medicines," Leahy said at a Judiciary Committee hearing. "That would be a shame, harmful to consumers, and a crime."
Generic drugs are typically cheaper for consumers to buy than brand name drugs.
During the hearing, a government antitrust official warned that legal settlements between major drugmakers and their generic rivals were a fast-growing problem that is stunting competition in the market for prescription drugs.
FTC Commissioner Jon Leibowitz testified that in fiscal 2006 there were 14 patent settlements, in which a generic competitor received compensation and agreed to restrict the introduction of a new generic drug. That was double the number in fiscal 2005, Leibowitz said.
In some cases, the FTC contends the settlements are a way for drugmakers to pay generics to stay out of the market.
The industry has been emboldened to forge such agreements by recent court rulings that have derailed several FTC lawsuits, challenging them as anti-competitive.
In one key decision in 2005, an appeals court in Atlanta overturned an FTC ruling that said Schering-Plough Corp. had illegally kept cheaper versions of its blood pressure drug K-Dur off the market through patent settlements with generic competitors. The U.S. Supreme Court turned down a petition to review the case last year.
"These developments threaten substantial harm to consumers and others who pay for prescription drugs," Leibowitz said, referring to recent court decisions.
The FTC supports legislation to stop the settlements, he said.
Under federal law, drugmakers are allowed to seek U.S. Food and Drug Administration approval for generic versions of brand-name drugs before a drug's patent expires. They must certify that the patent is invalid or will not be infringed by the new generic version.
