Senate Panel Supports Ban on Drug Company ‘Pay to Delay’ Agreements
A measure to prohibit brand-name drug companies from paying generic drug makers to hold off on selling their less-expensive versions of the same drugs has cleared a hurdle in the U.S. Senate.
The Senate Judiciary Committee voted 12 to 7 today to make such backroom deals between drug companies illegal, according to a Reuters news report. The bill will continue moving toward possible passage as law along with the sweeping overhaul of the nation’s healthcare system.
In June, we first reported about how the Justice Department was vowing to end the sleazy drug industry practice, commonly called “Pay to Delay.” The deals may save drug companies millions of dollars in profits, but they end up costing millions of consumers more at the pharmacy counter.
According a Federal Trade Commission report, drug consumers, insurance companies and the federal government spend an extra $3.5 billion each year for prescription drugs because brand-name companies pay generic producers to stay out of the market, Reuters reports.
Legislators are now one step closer to banning the common drug industry practice. While drug companies say paying generic competition to delay marketing their cheaper drugs is the best way to keep the costs of brand-name drugs down, lawmakers aren’t convinced.
The Justice Department has called such agreements “presumptively unlawful.”
President Barack Obama supports a ban, a break in philosophy from his predecessor President George W. Bush. European Union antitrust regulators also oppose such deals in their nations.
Not surprisingly, brand-name drug companies and generic drug companies are fighting efforts to ban “Pay to Delay” agreements. A branded medicine reportedly loses more than 80 percent of its revenue once cheaper generic versions are available.
Bristol-Myers Squibb Co. was the first brand-name drug company to engage in “Pay to Delay” in 1994 when the company paid $290 million to Schein Pharmaceutical to delay the sale of a generic version of the Bristol-Myers anxiety drug Buspar, Reuters reports.
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