Defeating drug lobby, Senate panel bans ‘pay-to-delay’ practices on generic drugs

Senate panel bans payments to delay generics

WASHINGTON — In a defeat for the powerful drug lobby, a Senate panel approved legislation to prohibit drug companies from paying generic drug makers to delay bringing less costly products to market.

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.

In a dramatic vote, the panel deadlocked 15-15 on an amendment by Sen. Arlen Specter, D-Pa., to strip the provision. Four Democrats voted with the drug lobby, including Sens. Frank Lautenburg of New Jersey and Barbara Mikulski of Maryland. Drug company lobbyists in the audience thought they had the vote won, provided they could win over every panel Republican.

But Sen. Richard Shelby, R-Ala., voted against the drug companies, helping give Kohl and Durbin a surprise win.

“At this time of spiraling health care costs, we cannot turn a blind eye to these anticompetitive backroom deals that deny consumers access to affordable generic drugs,” Kohl said.

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 underlying spending bill has yet to advance to either the House or Senate floors and the drug lobby is sure to continue the battle.

“Today’s vote … means that consumers are one step closer to saving billions on their prescription drugs,” Leibowitz said in a statement.