WASHINGTON, DC – Today, senior Senate Judiciary Committee members Herb Kohl (D-WI) and Chuck Grassley (R-IA) unveiled The Preserve Access to Affordable Generics Act to prohibit brand-name drug manufacturers from using pay-off agreements to keep cheaper generic equivalents off the market.

"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.  With this legislation, we can end a practice seriously impeding generic drug competition – competition that could save American families and taxpayers billions of dollars in health care costs" Kohl said. 

"These agreements between generic and brand name pharmaceutical manufacturers appear to simply line the pockets of the companies and leave the bill to the consumer.  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," Grassley said. 

The legislation would make illegal anti-competitive, anti-consumer patent payoffs in which brand name drug companies pay generic manufacturers millions of dollars to keep generic competition off the market.  Despite the opposition of the Federal Trade Commission to these patent settlements, two 2005 appellate court decisions have permitted these payoffs.  In the two years after these two decisions, the FTC has found nearly half of all patent settlements involved payments from the brand name from the generic manufacturer in return for an agreement by the generic to keep its drug off the market.  In the year prior to these decisions, however, no patent settlement reported to the FTC contained such an agreement.  According to a recent study by Pharmaceutical Care Management Association (PCMA), health plans and consumers could save $26.4 billion over the next five years by using the generic versions of 14 popular drugs that are scheduled to lose their patent protections before 2010.

Yesterday, the FTC filed an antitrust case challenging the latest "pay for delay" settlement. The FTC's complaint alleges that Solvay, the brand name manufacturer of a hormone-boosting drug, entered into an agreement with two generic companies to delay the entry of their generic version of the drug for nine years.  The FTC alleged that Solvay agreed in 2006 to share its profits with the generic competitors as long as they did not launch their generic versions until 2015.  If these allegations are proven true, this case represents the exact type of agreement that would be rendered illegal by The Preserve Access to Affordable Generics Act.  The legislation is co-sponsored by Senators Russ Feingold (D-WI) Dick Durbin (D-IL) and Sherrod Brown (D-OH).

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