Schumer: Dramatic Rise in Collusion Between Pharma and Generic Drug Companies is Keeping Generics off the Markets and Increase Drug Prices Across the

SCHUMER: DRAMATIC RISE IN COLLUSION BETWEEN PHARMA AND GENERIC DRUG COMPANIES IS KEEPING GENERICS OFF THE MARKETS AND INCREASE DRUG PRICES ACROSS THE BOARD

Senators Schumer and Johnson Call for Immediate Judiciary Committee Hearings on Recent Court Decisions Allowing Major Pharmaceutical Companies to Pay Off Generic Manufacturers to Stay Out of the Market

Government Report Shows Sixty-Seven Percent Increase in Settlements since 2004

U.S. Senator Charles E. Schumer, joined by Senator Tim Johnson (D-SD) today wrote to Judiciary Committee Chairman Arlen Specter asking him to hold hearings investigating the recent dramatic rise in settlements where major pharmaceutical companies pay generic drug companies to keep cheaper generics off the market. These deals allow brand name companies to pay off generic companies to delay, either temporarily or permanently, their entry into the market and provide a huge financial gain for both companies. By keeping cheaper generics off the market experts say that prescription drug prices will rise because of decreased competition. Schumer is the co-author of the Greater Access to Affordable Pharmaceuticals Act with Senator John McCain (R-AZ). The Schumer-McCain law, which was enacted in 2003, has enabled generic drugs to be brought to market sooner, and lowered the cost of prescriptions for millions of Americans.

"By hook or by crook, major pharmaceutical companies go out of their way to corner the market," Schumer said. "These shady deals are a financial boon for everyone, but the consumer. The high cost of prescription drugs is one of the most daunting problems Americans face today, and not just for seniors, but for everyone and these agreements become a huge financial burden on American families."

"This is market manipulation by the pharmaceutical companies. They are paying generic drug companies to hold off on producing lower cost alternatives while continuing to watch the money roll in. The high cost of prescription drugs is near crippling to many Americans. This practice makes things worse, which is why we have called upon the Judiciary Committee to hold hearings on the issue," Johnson said.

In 1999, the Federal Trade Commission successfully cracked down on these types of arrangements when it challenged patent settlements designed to keep generic drugs off the market while providing a blatant financial benefit to both branded and generic companies. For the last six years, most drug companies have followed the precedent set by the FTC and there have been no settlements that included these types of pay offs.

However, two recent appellate decisions, Schering-Plough Corp. v. FTC, and In re Tamoxifen Citrate Antitrust Litig., paved the way for the increase by holding that these settlement agreements do not violate antitrust laws. Since the decision, the regularity of these deals has skyrocketed. According to the FTC's report, in the six months following the March 2005 court decisions, more than two-thirds of brand name-generic settlement agreements included such terms.

In one such case, the Canadian generic drug company Apotex was paid by Bristol-Myers Squibb to delay introduction of the generic version of Plavix until 2011. Plavix, which thins the blood to prevent strokes, costs American consumers $3.8 billion every single year.

Schumer, a member of the Senate Judiciary Committee that has jurisdiction over anti-trust issues, called for the hearings in the committee because the agreements reduce competition in a market already dominated by only a few major players.

Their letter to Chairman Specter said, "I hope you will hold hearings on this issue so we can find out with certainty what the effects of these court opinions will be, and so that we may consider possible solutions to this potential health care crisis."

http://schumer.senate.gov/SchumerWebsite/pressroom/press_releases/2006/PR143.Generics.050206.html