KOHL STATEMENT ON NEW FTC REPORT ON INDUSTRY 'PAYOFFS' THAT INHIBIT GENERIC DRUG COMPETITION


WASHINGTON, D.C. - Today U.S. Senator Herb Kohl (D-WI) released a statement in reaction to a new report published by the U.S. Federal Trade Commission on the impact of pay-for-delay settlements that keep generic drugs off the market on consumer costs. Kohl was recently joined by eight other Senators in sending a letter to Majority Leader Harry Reid (D-NV), urging him to incorporate a provision to reduce these settlements in the final version of health reform legislation. Such a provision was included in the health reform bill passed by the U.S. House of Representatives.
 
"In 2009, there were a record 19 pay-for-delay settlement agreements which robbed Americans of a competitive marketplace. Each of these backroom deals kept generics off the market, resulting in higher drug costs for millions of consumers and more federal spending in the form of drug reimbursement costs. Today's FTC report is proof that if we are serious about bringing down prescription drug costs, we must enact legislation now to end these anti-consumer, anticompetitive back room deals."
 
In October, the Senate Judiciary Committee voted to pass a compromise version of Senator Herb Kohl's bill to curb pay-for-delay settlements.  Under these pay-off agreements, brand name drug companies settle patent disputes by paying the generic drug manufacturer millions of dollars in exchange for a promise that it will keep its version of the drug off the market.  The Preserve Access to Affordable Generic Drugs Act (S. 369) will reduce the anti-consumer practice of brand-name drug manufacturers using pay-off agreements to keep cheaper generic equivalents off the market by making the practice illegal. 
 
The Federal Trade Commission has estimated that stopping these types of settlement agreements would save consumers at least $35 billion over the next ten years.  The compromise measure recently passed by the Judiciary Committee reflects a change to the original bill that would allow settlement agreements between drug companies if they can prove with clear and convincing evidence that the deal will not harm competition.  The bill also contains significant penalties to serve as a strong deterrent against these anti-consumer agreements.
 
Kohl introduced S. 369 in February with Senators Chuck Grassley (R-IA), Russ Feingold (D-WI), Dick Durbin (D-IL) and Amy Klobuchar (D-MN) as original cosponsors. Senators Al Franken (D-MN), Susan Collins (R-ME), and Bill Nelson (D-FL) have since signed onto the legislation. Kohl serves as chair of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights.
 
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