Congress is moving to counter a growing practice among drug makers to sign
private agreements with pharmaceutical companies that manufacture generic
drugs that may keep low-cost versions of drugs off the market for years after
their original patents expire.
Manufacturers of generic drugs sometimes accept cash payments to delay
release of their own drug or a license to make and sell the name-brand drug in
The agreements and payments were sharply curtailed by regulators in recent
years, but court decisions in 2005 supporting the practice led to a recent
resurgence. Last month Democratic lawmakers introduced legislation to curb the
practice as a way to expand consumer access to the low-cost alternatives.
Without legislative intervention, critics of the private agreements said,
consumers and taxpayers will continue to be denied "billions" of
dollars in potential savings.
Drug manufact urers "are denying consumers the considerable savings
they would otherwise receive from generic drugs," said Rep. Bobby Rush
(D-Ill.), the lead sponsor of the legislation and chair of the Subcommittee on
Commerce, Trade, and Consumer Protection. The subcommittee, which has
jurisdiction over consumer-related issues, approved Rush's bill (HR 1902) in
The bill would bar agreements under which generic drug makers "agree
not to research, develop, manufacture, market, or sell, for any period of
time" alternatives to name brand drugs."
The bill's supporters, including Jon Leibowitz, commissioner of the Federal
Trade Commission (FTC), said existing law gives exclusive patent-challenge
rights to the first company to challenge a name-brand drug patent. A"
bottleneck" develops that keeps out drug manufacturers with
either stronger cases for marketing a drug in its generic version or products
less likely to infringe on the name-brand drug patent.
"Under the current interpretation of the law [subsequent generic drug
makers] cannot pursue their case until the first generic drug goes to
market," Leibowitz said.
He described the Rush bill as "a bright line" that would solve
the problem quickly.
Barry Sherman, Ph.D., CEO of Apotex Inc., an Ontario-based generic drug
maker, testified in May before the House Commerce, Trade, and Consumer
Protection Subcommittee that the bottlenecks have kept his company from
bringing drugs to the market. Although he tentatively supports the bill, he
said a better approach would be to give all companies that file suit on the
same day "shared exclusivity."
According to supporters, the legislation is needed to stem the growth of
the exclusion agreements. The number of such agreements has risen from almost
none in the years when the FTC was enforcing an administrative ban to 14 in
2006, after two federal courts ruled against the ban in separate cases the
Banning drug-maker agreements based on cash exchanges would save money for
both consumers and the government, which paid for $214 billion in prescription
drugs in 2006. Consumers Union estimated that generic-drug versions of just
five brand name drugs released in 2006 saved consumers over $6 billion.
"This is in no way a radical bill," Rush said at the hearing on
the bill. "We're trying to legislate with a scalpel, not a meat
Opponents of the measure, who include many Republicans, disagreed with
Rush's assessment. They characterized it as a "blunt instrument"
because it does not allow the FTC to examine such agreements on a case-by-case
basis for benefits to consumers. Private agreements can set a date on which
the generic versions of brand-name drugs will become available, they said.
Although that date is usually after the patent expiration date, extended court
challenges over patents only delays the availability of generics further.
Theodore Whitehouse, an attorney who represents other generic brand drug
manufacturers, said that one company estimated that 10 agreements it signed
actually hastened the release of generic drug versions by a total of 83.5
years and saved consumers $67 billion.
Similar legislation (S 316) aimed at banning the agreements between drug
companies was approved with bipartisan support by the Senate Judiciary
Committee in February. Supporters in that chamber have moved to attach the
bill's language to legislation that would overhaul the Food and Drug
Administration's drug safety procedures.
The text of the House and Senate bills can be accessed at<http://thomas.loc.gov/
by searching on the respective bill numbers, HR 1902 or S 316.▪