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Moves to ban compensation deals in the US

US committee votes to prohibit branded pharma companies offering compensation deals to generics manufacturers

The House Energy and Commerce Committee in the US has voted to ban ethical pharma companies paying generics manufacturers to delay the launch of cheaper generic versions of their branded drugs.

The committee approved, by a voice vote, a bill to stop branded pharma companies from offering generics firms compensation to delay entry to market. The Senate is also considering a similar bill. It is likely that the proposed bill will get presidential backing: President Barak Obama co-sponsored an earlier version of the legislation while a member of the Senate.

According to the Federal Trade Commission (FTC) compensation deals between pharma and generics firms cost Americans $3.5bn each year.

In Europe, Competition Commissioner, Neelie Kroes, has promised to oppose compensation deals, which she said increased European consumers' healthcare bills by 20 per cent between 2000 and 2007.

There needs to be more competition and less red tape in the pharmaceutical industry, Kroes said last month. The proclamation came as the European Commission published its final report on competition in the sector and stepped up its scrutiny of business practices under EC antitrust laws.

"The sector is too important to the health and finances of Europe's citizens and governments to accept anything less than best. The enquiry has told us what is wrong with the sector, and now it is time to act. When it comes to generic entry, every week and month of delay costs money to patients and taxpayers," said Kroes. "We will not hesitate to apply the antitrust rules where such delays result from anticompetitive practices," she added.

3rd August 2009

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