A Senate panel approved legislation to prohibit drug companies from paying generic drug makers to delay bringing less costly products to market. This marks a major defeat for the powerful drug lobby.
The Senate Appropriations Committee approved the measure, which was inserted into a spending bill that funds the Federal Trade Commission’s budget. The measure would ban a “pay-to-delay” practice — opposed by the FTC in a series of lawsuits brought since 2001 — in which brand-name drug companies and generic drug makers both profit. Brand-name drug makers get higher prices while the generic companies are paid to stay out of the market.
The provision was authored by Sen. Herb Kohl, D-Wis., with support from Dick Durbin, D-Ill., the No. 2 Democrat in the Senate and the chief author of the underlying spending bill.
The vote was tight, first deadlocking 15-15 on an amendment by Sen. Arlen Specter, D-Pa., to strip the provision. Four Democrats voted with the drug lobby, and the drug company lobbyists thought they had the vote won, provided they could win over every panel Republican.
Yet, Sen. Richard Shelby, R-Ala., voted against the drug companies, helping give Kohl and Durbin a surprise win. With health care costs spiraling up, Senator Kohl said “we cannot turn a blind eye to these anti-competitive backroom deals that deny consumers access to affordable generic drugs.”
The FTC estimates that pay-to-delay deals cost consumers $3.5 billion a year. The agency suspects branded and generic drug companies made 21 such deals since last October. It would also save the government $2.6 billion over the next decade by reducing drug costs.
FTC Chairman Jon Leibowitz attended the panel session and cheered the vote.
The spending bill containing this provision has yet to advance to either the House or Senate floors and the drug lobby will be continuing their battle. To encourage the passage of this provision that can save consumers billions on prescription drugs, contact your Congress people.