The US Senate Judiciary Committee has voted 12-7 in favour of legislation to outlaw deals agreed between branded drugmakers and generics firms to delay the entry of generic competitors to the market.

The Preserve Access to Affordable Generics Act (S 369), which was introduced by Democratic Senator Herb Kohl with cross-party support, would only permit such pay-for-delay deals if the companies involved could provide “clear and convincing evidence” that an agreement would promote competition. The original bill – introduced by Sen Kohl in February - sought to ban such deals outright, but the version approved on October 15 eases this slightly by stating that the presumption is that they are illegal. This is also the view that the Justice Department now takes of such arrangements.

Panel members who voted against the bill say the level of proof which it would require to show the deals promote competition is too high, and that it could have the effect of discouraging agreements that do just that. On the other hand, some of the bill’s supporters are unhappy that its provisions have not been rolled into the Senate health reform legislation which is set for a floor vote fairly soon, possibly in the week beginning October 26, after it has received a financial scoring from the Congressional Budget Office (CBO).

Nevertheless, the vote was welcomed by Jon Leibowitz, chairman of the Federal Trade Commission (FTC), who has condemned pay-for-delay deals as anti-consumer and has sought to have a number of them stopped by the courts. He estimates that banning the deals would save consumers at least $3.5 billion a year, and also provide significant cost-savings for the federal government which pays around a third of all prescription drug costs.

Following the Judiciary panel vote, Commissioner Leibowitz said the Committee “clearly recognizes the very real danger that these sweetheart deals pose to Americans struggling to pay their medical bills. Consumers must wait, sometimes years, for far less expensive generic drugs when branded pharmaceutical companies pay off their generic competitors to stay out of the market.”

However, Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association (GPhA) said it was deeply disappointing that the approved version of S 369 does not include a CBO score, which is needed to determine whether the bill could potentially have the unintended effect of benefitting the brand industry and keeping generics from getting to market in a timely manner.

“It simply makes sound fiscal sense to ensure that members voting on the legislation have a good understanding of its economic impact,” said Ms Jaeger. “Over the years, generic manufacturers have undertaken patent challenges that have ended in pro-competitive, pro-consumer settlements, generating tens of billions of dollars in savings for American consumers. Yet, this bill would result in a de facto prohibition on patent settlements – a terrible result for consumers, businesses and the health care system.”

The debate has overlooked the fact that settlements which successfully bring patent litigation to an end typically result in the early and predictable introduction of generic competition, she added.

“Without the ability to settle litigation, generic companies are far less likely to challenge brand patents to the detriment of the health care system and consumers. That’s why the current system of a case-by-case review by the federal government, to ensure that pro-consumers settlements are not blocked, benefits consumers over brand companies,” said Ms Jaeger.