Panel OKs bill banning payoffs to delay generics

The Senate Judiciary Committee has voted to pass a compromise version of a bill that would ban brand-name drug manufacturers from using payoff agreements to keep generic-drug manufacturers from introducing less-expensive versions of drugs once their patents expire.

The legislation, called the Preserve Access to Affordable Generic Drugs Act, was introduced this past February by Sens. Herb Kohl (D-Wis.), Chuck Grassley (R-Iowa), Russ Feingold (D-Wis.), Dick Durbin (D-Ill.) and Amy Klobuchar (D-Minn.).

Under the compromise version, it would be illegal for drugmakers to strike such deals unless they can clearly prove that the arrangement would not hurt competition. The Federal Trade Commission has said the practice violates antitrust rules and has sought to end it for several years now. In February, the agency filed a lawsuit charging drugmaker Solvay with paying off two generic drugmakers to delay production of less-expensive versions of its hormone-boosting drug Androgel.

If the bill is enacted, the FTC estimates consumers would save $35 billion and the federal government $12 billion on prescription drug purchases over the next 10 years.

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