FTC favors ban on drug company payments

FTC favors ban on drug company payments

	Published : Thu, 03 May 2007 00:17 By : Agencies Print this Story

WASHINGTON (AP) - A top federal regulator on Wednesday threw his support behind a proposal to prohibit pharmaceutical companies from making lucrative payments to generic rivals for preventing cheaper versions of patented drugs from reaching the market.

Federal Trade Commissionner Jon Leibowitz testified before a House subcommittee in support of legislation that would make it illegal for brand-name companies to offer generic drug makers cash and other incentives in return for delaying the launch of generic drugs.

Generic drug companies, such as Barr Pharmaceuticals and Mylan Laboratories Inc., routinely challenge drug patents in court to gain legal authority to market their generic versions. Increasingly though, generic drug companies avoid lengthy and expensive litigation through negotiated settlements, which often delay the launch of generic versions. The generic companies receive cash or lucrative licensing and marketing agreements.

The FTC and some lawmakers say the settlements restrict competition and prohibit cheaper drugs from reaching the market.

'Agreements that delay generic competition harm all who pay for prescription drugs: individual consumers, the federal government, state governments trying to provide access to health care with limited public funds, and American businesses striving to compete in a global economy,' Leibowitz said in his prepared testimony.

Trade groups for the generic and brand drug industries defended the settlements in similarly worded statements, arguing that they are often the most efficient way to resolve legal disputes that would otherwise postpone the launch of generics indefinitely.

'The bill recently introduced in the House would have a chilling effect on these settlements and could potentially impact the future innovation of lifesaving medicines,' said Billy Tauzin, a former congressman who is now president of the Pharmaceutical Research and Manufacturers of America.

The legislation by Rep. Bobby Rush, D-Ill., is similar to a measure introduced in the Senate earlier this year. A floor vote on that vote has not yet been scheduled.

To coincide with the Senate bill's introduction in Janaury, the FTC published a report showing that the number of questionable patent settlements between brand and generic drug makers has increased markedly since Schering-Plough Corp. prevailed over the agency in a highly publicized 2005 case in which the Federal Court of Appeals for the 11th Circuit in Atlanta reversed the FTC's ruling that two such Schering settlements violated antitrust laws.