February 3, 2009 / 8:57 PM / 10 years ago

UPDATE 1-US senators propose bill to stop generic drug delays

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WASHINGTON, Feb 3 (Reuters) - Two senior senators have introduced a bill that would make it illegal for pharmaceutical companies to pay generic drugmakers to keep lower priced alternatives off the market.

“It’s time to stop these drug company pay-for-delay deals that only serve the profits of the companies involved and deny consumers access to affordable generic drugs,” said Sen. Herb Kohl, a Wisconsin Democrat, who unveiled the legislation along with Sen. Chuck Grassley, an Iowa Republican.

As senator, President Barack Obama supported a similar bill. There is no companion legislation in the U.S. House of Representatives.

The Federal Trade Commission, one of two U.S. agencies to enforce antitrust law, argues that patent settlements are illegal if a brand name drug company pays a generic firm to delay sales of a cheaper equivalent.

It filed suit last week against Solvay SA (SOLB.BR), which had struck deals in 2006 with generic drug companies Watson Pharmaceuticals Inc WPI.N, Par Pharmaceuticals PRX.N and Paddock Laboratories to delay their production of a cheaper version of Solvay’s testosterone-replacement therapy AndroGel.

But U.S. courts are divided on the issue.

The first known reverse payment was in 1994 when Bristol-Myers Squibb Co (BMY.N) paid $290 million to Schein Pharmaceutical to delay sale of a generic version of the anti-anxiety drug Buspar. (Reporting by Diane Bartz; editing by Richard Chang)

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