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Senate to mull ban on "pay for delay" pharmaceutical deals

WASHINGTON (Reuters) - Key Democratic and Republican senators reintroduced legislation on Tuesday that would make it illegal for brand-name pharmaceutical companies to pay generic drug makers to keep their cheaper medicines off the market.

Such deals, in which big drug companies resolve patent litigation with potentially infringing generic firms by reaching a settlement that delays a generic version of a drug in exchange for a payment, have angered U.S. and European antitrust enforcers for years.

The bill is sponsored by Senator Amy Klobuchar, a Democrat from Minnesota and the new chair of the Senate Judiciary Committee's antitrust panel, and by Senator Chuck Grassley, a Republican from Iowa.

"I have long supported efforts to crack down on this behavior and the recent rise in pay-for-delay agreements underscores the need for legislation to help make sure people have access to the drugs they need at a price they can afford," Klobuchar said in a statement.

Similar bills, including one in 2010, have failed in part because of opposition from the drug industry, both branded and generic. It was not immediately known if a companion bill would be introduced in the U.S. House of Representatives.

Opponents of the measure are already pressing for meetings with the two lawmakers and are confident that it will go nowhere, said Ralph Neas, chief executive of the Generic Pharmaceutical Association trade group.

"I do believe that a majority of Congress opposes the bill," said Neas, who said the settlements were good for consumers. "I know that (Federal Trade Commission Chairman) Jon (Leibowitz) has this catchy phrase 'pay for delay' but it's wrong. Patent settlements save."

The FTC said in January that brand name drug firms reached agreements with generic manufacturers 40 times in the latest fiscal year, delaying the arrival of cheaper drugs to pharmacists' shelves. That was up from 28 the previous year and the highest since the FTC started tracking them.

The commission has had mixed success in fighting the deals in court, but the issue could be coming to a head.

Most recently, the U.S. Supreme Court agreed to hear an appeal by the FTC, which had challenged annual payments of $31 million to $42 million by then-owner Solvay Pharmaceuticals Inc to stop generic versions of AndroGel, a treatment for the underproduction of testosterone, until 2015. AndroGel is now a product of AbbVie.

In Brussels in late January, EU antitrust regulators stepped up their fight against drug companies suspected of blocking cheap generic medicines, charging Johnson & Johnson and Novartis over the painkiller fentanyl.

The European antitrust watchdog said it believed the two had agreed on a "pay-for-delay" deal on generic versions of the drug, hurting Dutch consumers and healthcare providers.

(Reporting by Diane Bartz; Editing by Ros Krasny and Dan Grebler)

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