Speeding generics to market

Bill targets strategy drug makers use to slow competition

WASHINGTON -- Major lobbying by the drug industry has stalled legislation aimed at speeding the availability of cheaper generic drugs.

The U.S. Senate bill would ban most settlements known as "reverse payments," in which a brand-name company pays a generic manufacturer to delay the introduction of the generic drug.

The Federal Trade Commission has called on Congress to take action, saying such settlements could cost U.S. consumers billions of dollars.

An Associated Press review of lobbying reports, from July 1, 2006, through June 30, 2007, found that $38.8 million was spent by at least a dozen generic and brand-name companies and their trade associations on issues, including the Senate legislation. The lobbying reports do not specify how much of that money was directed at the reverse payment bill.

"Lobbyists have a lot of influence in Washington," said the bill's sponsor, Sen. Herb Kohl, chairman of the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights. "If we can just get this to a vote, it will be pretty hard for people to vote against it. A vote against this is a vote against consumers."

Kohl, D-Wis., also leads the Senate Special Committee on Aging, where he has pushed for generic drugs as a way for seniors to save money on their medications. Generic drugs are 30 to 80 percent cheaper than brand-name drugs, according to the Generic Pharmaceutical Association.

Kohl pushed the reverse payment legislation during the past two sessions of Congress. This year, House supporters introduced a similar bill, which remains in committee. Neither bill has come up for a vote, although the Senate bill made it through the Judiciary Committee a few months ago.

In May, Kohl tried to get a vote on the Senate floor, but Republicans objected. Sen. Mike Enzi, R-Wyo., said Sen. Jon Kyl, R-Ariz., and others involved with the legislation wanted more time to work on it. Kyl asked the Justice Department's antitrust division for its views on the bill and is waiting for a response, said Kyl spokesman Andrew Wilder. The antitrust division declined to comment.

Congress passed the Hatch-Waxman Act in 1984, which established procedures to encourage generic companies to challenge patents before their expiration. In recent years, generic companies have increasingly resolved such challenges through settlements in which the generics receive cash or lucrative licensing and marketing agreements.

Drug companies are required to file their settlements with the Federal Trade Commission. Two federal appeals court rulings in 2005 upholding the legality of reverse payments have made it more difficult for the agency to block them.

In one of those cases, Barr Laboratories abandoned its successful challenge of AstraZeneca's patent for the breast cancer drug tamoxifen. In exchange, Barr got a $21 million payment, entering an agreement with AstraZeneca under which Barr sold generic tamoxifen that was provided by AstraZeneca.

Consumers filed a lawsuit challenging the agreement. The 2nd U.S. Circuit Court of Appeals upheld a federal judge who had concluded that the agreement did not violate federal antitrust laws. In June, the Supreme Court refused to take up an appeal.

A plaintiff in that case, Helen Donega of North Adams, Mass., said she saved only about 5 percent off the brand-name price when she bought the Barr generic tamoxifen in 1998 and 1999. Donega, who had insurance through Medicare but no drug coverage, said she paid $85 to $90 a month for the drug.

She eventually bought tamoxifen in Canada for about one-tenth of the price she was paying in the U.S.

Donega, 75, who had a mastectomy and has been cancer-free for several years, said she was amazed when she learned of the deal between Barr and AstraZeneca, which sold tamoxifen under the brand name Nolvadex. AstraZeneca's patent on the drug has since expired.

"I must have been naive. I thought the government was on our side," she said. "No, the government isn't on our side. Big Pharma is powerful and has a lot of money. That's whose side they're on."

AstraZeneca spokesman Tony Jewell said the settlement with Barr Laboratories was meant to resolve a patent dispute, not to delay generic tamoxifen.

Not all patent litigation settlements between generic and brand name companies involve payments, and Kohl's bill bans only those where the generic company receives something of value. The legislation would allow, for example, a deal in which the two sides compromise on the date that a generic can enter the market. And Kohl recently agreed to add a provision that would exempt some reverse payment settlements if the FTC determines they would benefit consumers.

The FTC has called on Congress to pass legislation to crack down on the reverse payment settlements.

"Such settlements restrict competition at the expense of consumers, whose access to lower-priced generic drugs is delayed, sometimes for many years," FTC Chairwoman Deborah Platt Majoras said in testimony before a House task force in September.