Senators Introduce Legislation To End Agreements Between Brand-Name, Generic Pharmaceutical Companies

Sens. Herb Kohl (D-Wis.) and Chuck Grassley (R-Iowa) on Tuesday announced that they have introduced a bill (S 369) to end agreements under which brand-name pharmaceutical companies pay generic pharmaceutical companies to delay the launch of generic versions of the medications, CQ HealthBeat reports. According to Kohl and Grassley, the number of such agreements has increased since two appeals court decisions in 2005 allowed them. In the statement, Kohl and Grassley, who introduced similar legislation last year, said, "In the two years after these two decisions, the Federal Trade Commission has found nearly half of all patent settlements involved payments from the brand-name to the generic manufacturer in return for an agreement by the generic to keep its drug off the market."

Kohl, chair of the Senate Judiciary Antitrust, Competition Policy and Consumer Rights Subcommittee, said, "It's time to stop these drug company pay-for-delay deals that only serve the profits of the companies involved and deny consumers access to affordable generic drugs." Grassley, ranking member of the Senate Finance Committee, added, "In a time when our federal health care programs such as Medicare and Medicaid are facing extraordinary fiscal strains, this wheeling and dealing only delays the entry of lower-priced medicines in the marketplace."

Pharmaceutical Research and Manufacturers of America Senior Vice President Ken Johnson said that the group "continues to believe that legislation imposing a blanket ban on certain types of patent settlements could decrease the value of patents and reduce incentives for future innovation." He added, "A sweeping ban is also unnecessary" because FTC and others "already have the authority to review and evaluate any patent settlement agreement between a brand-name company and a generic company."

FTC on Monday in U.S. District Court in California filed a lawsuit against Solvay Pharmaceuticals over allegations that agreements with three generic pharmaceutical companies illegally delayed the launch of lower-cost generic versions of the hormone replacement therapy AndroGel (Reichard, CQ HealthBeat, 2/4).

Editorial
The agreement between Solvay and the three generic pharmaceutical companies "keeps prices high" for medications, and "Solvay's gain was the consumer's loss," according to a Los Angeles Times editorial. According to the editorial, such agreements are "anti-competitive and bad for consumers," and although "companies such as Solvay deserve patent protection," consumers have a "strong interest in making sure that generic drugs become available as soon as legally appropriate." The editorial concludes, "At this point, there's little to be gained, at least for consumers, from backroom deals made by interested corporate parties" (Los Angeles Times, 2/5).