March 31st, 2009

Reports the Wall Street Journal:

As part of its drive to cut health-care costs, the Obama administration wants to stop the payments pharmaceutical companies make to generic-drug makers to delay the launch of cheap copies.

Democratic lawmakers have talked about passing legislation to outlaw such deals, and President Barack Obama has vowed to stop the deals in his budget. A House Energy and Commerce subcommittee is holding a hearing Tuesday on the issue.

The savings to the health-care system from eliminating such agreements, which are sometimes referred to as “pay to go away,” would be significant. Generic drugs can cost as little as a quarter of the price of their brand-name cousins, saving billions of dollars a year in drug costs. The deals can also set the stage for further delays in generic drugs coming to market.

Get more details on the plan from both side’s perspectives at the WSJ.