Senate Bill to Encourage Generic Drug Market

WASHINGTON (Reuters) - Generic drugs would have an easier path to U.S. markets under a bill due to be introduced in the Senate, said Democratic Senator Jeff Bingaman, a sponsor of the bill.

The bill also has the support of Republican Senator David Vitter and will be introduced on Wednesday, Bingaman's office said.

It would amend the 1984 Hatch-Waxman Act, which was supposed to empower generic drug companies by allowing them to challenge pharmaceutical patents if they thought they were weak.

If the generic company challenged a drug patent and won, it was rewarded with a 180-day window of exclusivity to sell a generic.

However, one result of that half-year of exclusivity is that brand-name and generic companies will settle a patent lawsuit but sometimes make a deal in which the generic company will stay out of the market for a period of time, according to critics of the practice.

Meanwhile, no other generic may come to market.

In some cases, the brand-name company paid the generic company to delay production, a type of deal the Federal Trade Commission calls pay for delay.

The Bingaman-Vitter bill would permit any generic company that successfully challenges a drug patent to enter the market, allowing more than one generic company to come to market.

Everyone who's focused on this set of issues believes that there's a major flaw in the current law, unintended obviously, Bingaman told Reuters. We think we have a solution to that flaw.

The FTC, which has been fighting the deals, says there were 28 pay-for-delay deals in the 2011 fiscal year that resulted in slower generic entry.

The U.S. agency says the deals violate antitrust law if brand-name pharmaceuticals pay generic drug makers to stay off the market. It has had mixed success before the courts in opposing the deals.

Generic drugs can cost up to 90 percent less than brand-name drugs, although a 20 percent to 30 percent discount is more typical, the agency has said.

Recently, Senators Herb Kohl and Chuck Grassley urged the congressional super committee trying to cut the U.S. budget deficit to ban the pay-for-delay deals.

Kohl has introduced legislation to make the deals illegal and has eight co-sponsors, including Grassley.

Neither bill has a version that has been introduced in the U.S. House of Representatives.