If passed, the bill -- introduced by Sens. Patrick Leahy, D-Vt., and Herb Kohl, D-Wisc. -- would halt the practice of big-name pharmaceutical companies legally settling with makers of rival generic drugs by agreeing to pay the generic companies to delay the introduction of cheaper alternatives to patented, brand-name medicines.
Leahy's bill has gained support from a number of senators, including Charles Grassley, R-Iowa, chairman of the Senate Committee on Finance. According to Reuters, a Senate aid said lawmakers in the House are in the process of discussing support of similar legislation.
The bill has also won the support of Federal Trade Commission (FTC) Commissioner Jon Leibowitz, who said that in 2006, brand-name drug firms made 14 settlements with generic competitor companies, which received money to delay the introduction of cheaper drugs. To complicate matters, the FTC recently lost several lawsuits brought against big drug companies for suppressing generic rival drugs.
A federal appeals court ruled in favor of K-Dur blood pressure drug maker Schering-Plough Corp. in 2005, ending the FTC's case that the company had broken trade laws in keeping a rival generic version of K-Dur off the market. Similar cases against AstraZeneca's Tamoxifen, Bristol-Myers Squibb's Plavix, and Sanofi-Aventis' Provigil all ended in favor of the pharmaceutical industry.
If passed, Leahy's bill would further restrict the actions of high-profit drug companies, which were dealt a blow last week when the House voted to require the federal government to negotiate cheaper prescription drugs for elderly Americans on Medicare.
Billy Tauzin, president of drug firm trade group Pharmaceutical Researchers and Manufacturers of America, testified that banning the settlements would damage drug companies' innovation and reduce generic firms' incentives to put cheaper drugs on the market.
Bruce Downey, chairman of generic firm Barr Pharmaceuticals, Inc., said a ban "will discourage vigorous challenges of patents because generic companies will lack the flexibility to settle some cases once they are filed."
However, Leahy said the intent of current anti-competition laws was not to deny poor Americans low-cost alternatives to expensive brand-name drugs.
"Congress never intended brand-name drug companies to be able to pay off generic companies not to produce generic medicines," Leahy said at a hearing of the Senate Judiciary Committee, for which he serves as chairman. "That would be a shame, harmful to consumers, and a crime."