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Republicans Seek to Derail Plan Restricting Drug Company Deals

Republican senators are vowing to block a measure that would put limits on patent agreements between generic and brand-name drug companies, a practice that critics call pay-for-delay deals.

“The bill would do serious violence” to the process for bringing cheaper generic drugs to market, Republican Senators Jeff Sessions of Alabama, Lindsey Graham of South Carolina, Tom Coburn of Oklahoma and John Cornyn of Texas said in a Sept. 17 letter to two party leaders.

Their tactics could postpone consideration of the bill until the next Congress is seated, when likely gains by Republicans in the November midterm elections could mean defeat for the measure.

Republicans could “delay it until after the election, and then as a practical matter it’s dead,” Robert Lande, director of the Washington-based American Antitrust Institute and a bill supporter, said in an interview.

Senator Herb Kohl, a Wisconsin Democrat who is the measure’s cosponsor, said he wants to try to pass it this year by attaching it to a bill with broad bipartisan support.

“Every day we don’t pass this legislation is another day that affordable generics are kept out of the hands of consumers, and another day that taxpayers foot the bill for sky-high prescription drug reimbursements,” Kohl said in a statement.

Licensing Rights

The U.S. Federal Trade Commission contends brand-name companies often offer generic-drug manufacturers licensing rights on a product or other compensation in exchange for an agreement that delays the marketing of cheaper drugs.

The drug bill has some support among Republicans. In a statement, Senator Charles Grassley, an Iowa Republican and a co-sponsor, called the deals “anti-competitive, anti-consumer pay-offs.”

Drug companies that oppose the legislation, including Cephalon Inc. and Teva Pharmaceutical Industries Ltd., said the arrangement can help consumers by bringing cheaper drugs to market before a patent otherwise would have allowed.

The House on July 2 passed a version of the measure as part of a war-funding bill.

Kohl said he is trying to incorporate his plan into a bill that has programs that must be funded to take advantage of the cost-saving features of restricting the drug deals. The Congressional Budget Office estimated that his legislation would save taxpayers $2.7 billion over 10 years.

Funding Measure

On July 29, the Senate Appropriations Committee attached Kohl’s bill to legislation that funds the Federal Trade Commission.

Republican opponents, in their Sept. 17 letter to Senate Minority Leader Mitch McConnell of Kentucky and Senator Thad Cochran of Mississippi, the ranking Republican on the Appropriations Committee, said they would block Senate action on the spending bill as long as the drug measure was part it.

Overcoming that tactic, or any similar move to prevent consideration of the proposal, requires 60 votes in the 100- member Senate. Democrats control the Senate 59-41.

“We have serious concerns about attaching this controversial legislation to any moving vehicle in the Senate,” Stephen Boyd, a spokesman for Sessions, said in an e-mail.

The senators objections are the latest hurdle to imposing limitations on the agreements. A U.S. appeals court on Sept. 7 refused to reconsider whether the settlement Bayer AG reached over a challenge to its patent on the anthrax treatment Cipro was appropriate.

Legal Setback

The decision was a setback for Federal Trade Commission Chairman Jon Leibowitz, who has made banning the deals a priority.

“We haven’t won a major court case since 2003,” Leibowitz said in a speech to a Washington antitrust conference on Sept. 21. “We haven’t passed any legislation yet.”

In an interview after his speech, Leibowitz said he has “great confidence” that Kohl will succeed in getting the bill approved.

The legislative push “started as a two-steps-back, one- step-forward process,” he said. With congressional support now increasing, he said, “We’re probably more in a two-steps- forward, one-step-back process.”

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editor responsible for this story: Mark Silva in Washington at msilva34@bloomberg.net

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