Senate may end deals between drug companies that delay generic alternatives

Key senators from both political parties said on Wednesday they would back legislation that would stop drug makers from striking deals to restrict the introduction of cheaper generic drugs. 

According to Reuters, the bill planned by Democrats Patrick Leahy (D-VT) and Herb Kohl (D-WI) targets an increasingly common tactic used by brand-name drug makers - "legal settlements that involve payments to generic rivals to delay the introduction of generic alternatives." 

The deals cheat Americans of billions of dollars in savings, regulators on Wednesday told lawmakers seeking to ban the arrangements.  The Federal Trade Commission (FTC) and others allege the settlements allow brand-name pharmaceutical companies to pay off would-be generic competitors, which then agree to delay introduction of their less costly but otherwise identical versions of the original medicines. 

The FTC issued a report on Wednesday, coinciding with a Senate Judiciary Committee hearing on the topic, that shows the settlements have become more common since two 2005 appeals court decisions upheld their legality.  Typically, a generic manufacturer makes more from such a payment than it would from actually selling its version of a drug.