News | January 16, 2007

Senate Bill Aims to Stop Generic Drug Pacts

Jan. 17, 2007 - 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."

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.

Generic drugs are typically cheaper for consumers to buy than brand name drugs, and the Federal Trade Commission has filed several lawsuits in recent years challenging the settlements as anti-competitive.

In some cases, the FTC contended 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 of the FTC's legal challenges.

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.

Under federal law, drugmakers are allowed to seek FDA 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.

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