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Lobbying halts progress of US generic drug laws

Legislation aimed at speeding the availability of cheaper generic drugs is stalled by intensive lobbying by the pharmaceutical industry

Legislation aimed at speeding the availability of cheaper generic drugs has been stalled by intensive lobbying by the pharmaceutical industry, according to media reports.

The US Senate's law would ban most settlements known as "reverse payments", where a branded drug company pays a generic manufacturer to delay the introduction of the generic drug. The Federal Trade Commission (FTC), which has called on US Congress to take action, says such settlements could cost US consumers billions of dollars.

According to the Associated Press, from 1 July 2006 until 30 June 2007 USD 38.8m 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 are not obliged to specify how much of that money was directed at the reverse payment bill.

Of this figure, the Pharmaceutical Research & Manufacturers of America (PhRMA) spent USD 19.5m in the 12-month period ending 30 June on in-house lobbying expenses, which is an increase of approximately USD 3m over the previous 12-month period.

The Generic Pharmaceutical Association (GPA) reported lobbying expenses of around USD 420,000 for the first six months of 2007. The association did not report lobbying on the bill in its calendar 2006 report. The rest was spent by a variety of pharmaceutical companies, including German-based Bayer, US-headquartered Schering-Plough, Pfizer and Israeli generics giant Teva Pharmaceuticals.

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

Drug companies must file their settlements with the US Federal Trade Commission (FTC), but two federal appeals court rulings in 2005 upholding the legality of reverse payments have made it more difficult for the agency to block them.

For example, Barr Laboratories abandoned its successful challenge to AstraZeneca's (AZ) patent for breast cancer drug tamoxifen. Consequently, Barr received a USD 21m payment and entered an agreement with AZ, where Barr sold tamoxifen provided by the Anglo-Swedish company.

As a result, US consumers filed a lawsuit. The US Court of Appeals upheld a federal judge who had concluded that the agreement did not violate federal antitrust laws. The Supreme Court refused to take up an appeal.

AZ spent approximately USD 2.4m in lobbying expenses over the 12-month period ending 1 July 2007 on issues including the reverse payment bill.

Barr spent USD 660,000 in the same 12-month period. At a Senate Judiciary Committee hearing this year, Barr Chairman and CEO Bruce L Downey said the company settled the case with AZ because it thought it would lose its patent challenge on appeal.

FTC wants crackdown
The FTC has called on Congress to pass legislation to crack down on the reverse payment settlements, although it hasn't endorsed any specific bill.

FTC chair Deborah Platt Majoras said: "Such settlements restrict competition at the expense of consumers, whose access to lower-priced generic drugs is delayed, sometimes for many years."
 
PhRMA senior vice-president Ken Johnson said in a statement that pharmaceutical research companies invest billions of dollars developing new medicines, and that patent rights help the companies recoup those investments and fund new research.

Jake Hanson, a lobbyist for Barr Laboratories, said that the settlements are sometimes necessary when a generic company considers all the ramifications behind a patent challenge.

30th September 2008

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