Senate panel approves 'pay-for-delay' drug provision

A provision limiting generic drugmakers' ability to accept money to settle patent disputes survived — barely — a challenge in the Senate Appropriations Committee Thursday afternoon.

By a vote of 15-15, the committee rejected an amendment by Sen. Arlen Specter (D-Pa.) stripping the provision from the Financial Services and General Government Appropriations bill. The provision, championed by Sens. Herbert Kohl (D-Wis.) and Chuck Grassley (R-Iowa), was included in the bill reported out of the subcommittee on Financial Services and General Government earlier this week.

"The cost of brand-name drugs rose nearly ten percent last year," Kohl said in a statement. "In contrast, the cost of generic drugs fell by nearly ten percent. At this time of spiraling health care costs, we cannot turn a blind eye to these anticompetitive backroom deals that deny consumers access to affordable generic drugs."

Kohl's bill, the Preserve Access to Affordable Generic Drugs Act, would save the government about $2.5 billion over 10 years according to the Congressional Budget Office. Furthermore, the Federal Trade Commission has estimated it would save consumers at least $3.5 billion a year.

Both the brand-name and generic drug industry oppose the bill.

The bill would still allow settlement agreements when the drug companies can prove to a judge by clear and convincing evidence that the deal won't harm competition.

The House passed the companion bill in March as part of its Supplemental Appropriations Act of 2010.