It’s kind of awkward that the Federal Trade Commission wants the health-care bill to include a ban on settlements between drug companies that keep generic drugs off the market – delays the commission says costs consumers $3.5 billion a year.

The ban has actually been around for, oh, 26 years, ever since the Hatch-Waxman Act of 1984 outlawed the deals.

The FTC’s challenged the settlements, including in a lawsuit filed last year in California. Through 2004, courts consistently ruled that the deals were “automatically” illegal. The commission’s not had a lot of luck since 2005 though, in part because the Justice Department has refused to back it.

The commission’s Bureau of Competition has gone to the bully pulpit in the past five years, issuing annual reports about the ongoing proliferation of “pay for delay” settlements. “That’s good news for the pharmaceutical industry, which will make windfall profits on these deals,” Commissioner Jon Leibowitz said two years ago. “But it’s bad news for consumers, who will be left footing the bill.”

The “pay for delay” game starts when another company is able to replicate a brand-name drug. The company’s defense when the brand-name manufacturer sues usually is “we just used the same ingredients; not the same recipe.”

The lawsuit is settled quickly, with either the brand-name company paying the generic manufacturer to end production or with the generic manufacturer agreeing to pay the brand-name company royalties. Either way, the consumer loses. So do healthy taxpayers – the government pays for about 30 percent of the prescriptions filled in the country.

Congress, meanwhile, has had before it for at least three years legislation that would reiterate the ban. It made it as far as passing the Senate Judiciary Committee last year, and the House added it to the health care bill. The ban isn’t in the Senate version, though some are pushing Majority Leader Harry Reid to add it.

It’s a strange world when an agency has to go to Congress and beg for the power to enforce a 26-year-old law – a law courts once upheld until Justice Department inertia or something less benign set in. In the end, though, relegislating the issue will be quicker than waiting for it to work its way back through the courts and hoping for good rulings.

Big Pharma will, of course, fight the ban in the Senate. They’ll augment their usual “innovation is expensive” argument by pointing to all the money they’ve already agreed to chip in toward health care reform.

Given the new customers the companies also will benefit from as more Americans become insured, those are hard arguments to swallow. Especially since the ban actually has been in place for more than two decades.

Copyright 2010 Debra Legg. All rights reserved.

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