House subcommittee to conduct hearing to discuss strategies to end agreements between brand-name, generic drugmakers, limit number of plans

Mar 31 2009

A House Energy and Commerce subcommittee on Tuesday is scheduled to conduct a hearing on the issue of ending agreements under which brand-name pharmaceutical companies pay generic drugmakers to delay the launch of less costly versions of top-selling medications, the Wall Street Journal reports.

According to the Journal, the issue of such "pay to go away" agreements has been outlined in President Obama's budget proposal as part of his administration's attempt to reduce health care costs. In addition, Sen. Herb Kohl (D-Wis.) in February introduced a bill (S 369) to end the agreements and Rep. Bobby Rush (D-Ill.) last week introduced a similar bill (HR 1706) in the House.

Some experts say the agreements can "set the stage" for additional delays in the introduction of new generic drugs to the market, the Journal reports. According to the Journal, such agreements also prevent billions of dollars in spending reductions in the U.S. health care system because generic drugs can cost as little as one-fourth the price of brand-name treatments. Scott Hemphill, an associate professor at Columbia Law School, said 10 brand-name drugs with $17 billion in annual U.S. sales currently are protected by such agreements, including Pfizer's anti-cholesterol drug Lipitor.

Since 2001, the Federal Trade Commission has filed six lawsuits against brand-name drugmakers to block the payment deals. However, the agency "has encountered little success in the courts," according to the Journal. FTC Chair Jon Leibowitz in a recent interview said that ending agreements is a priority for his agency because pharmaceutical companies benefit from the deals while "consumers are left holding the bag" (Rockoff, Wall Street Journal, 3/31).