Senate Republicans vow to block financial services spending bill

By Meghan McCarthy

September 20, 2010

A group of Senate Republicans have told their leadership they will block consideration of fiscal 2011 Financial Services Appropriations legislation if a pharmaceutical "pay-for-delay" amendment that Senate appropriators attached to the spending bill isn't stripped out of the measure.

In a letter sent to Senate GOP leaders Friday, Republican Sens. Jeff Sessions of Alabama, Tom Coburn of Oklahoma, John Thune of South Dakota, and John Cornyn of Texas said the inclusion of the amendment in appropriations legislation "is a gross breach of Senate custom," because the Judiciary Committee considered similar legislation in October.

The Senate Appropriations Committee approved the Financial Services bill July 29 on a party-line vote of 18-12, with all Republicans voting against the measure.

The pharmaceutical provision seeks to prevent brand-name and generic drug manufacturers from agreeing to settlements that essentially trade cash for promises that generic drug firms will not challenge brand-name drug patents for a set period of time.

It is similar to legislation by Sen. Herb Kohl, D-Wis., which nearly all Republicans on the Judiciary Committee opposed last year. The Congressional Budget Office has estimated the Kohl language would save the government $2.6 billion over 10 years by allowing generic drugs to enter the market sooner, thereby reducing Medicare and Medicaid pharmaceutical spending.

Kohl's "pay-for-delay" legislation has been considered most recently in the House when it passed a version of the fiscal 2010 war supplemental on July 1. House Democrats swapped their proposal prohibiting all deals between brand-name and generic firms in favor of Kohl's legislation, which doesn't ban the agreements, but establishes a legal presumption in any Federal Trade Commission proceeding that any deal to limit the release of a new drug is anticompetitive and illegal.

Kohl's measure would give companies the opportunity to prove to the FTC, with clear and convincing evidence, that the agreement would benefit industry competition.

But the legislation never made it to the Senate floor as part of the supplemental, and a similar provision also was stripped from the Senate's healthcare overhaul bill.

The Senate Republicans opposed to having the amendment in the Financial Services spending bill said they did not believe the FTC could successfully mediate the conflicting interests of the generic and brand-name drug manufacturers.

"We believe that the reported bill gives excessive power over such settlements to the FTC," they said, "and that the bill would do serious violence to the Hatch-Waxman process for the market entry of generic drugs."

Despite objections, it is unlikely any individual non-national security appropriations measures will make it the Senate floor before a continuing resolution is needed by the start of the new fiscal year Oct. 1 to pay for government operations.


By Meghan McCarthy

September 20, 2010

http://www.govexec.com/oversight/2010/09/senate-republicans-vow-to-block-financial-services-spending-bill/32373/