The U.S. Federal Trade Commission (“FTC”) has reported that name-brand drug manufacturers will cost U.S. taxpayers billions of dollars over a 10 year period by paying generic drug manufacturers to delay their introduction of lower-cost generic alternatives to brand-name drugs.
The FTC found that for the period from October 1, 2010 through September 30, 2011 (Fiscal Year 2011), drug companies entered into 28 potential pay-for-delay deals (there were a record 31 such deals in the prior fiscal year). The deals involved 25 different name-brand pharmaceutical products with combined U.S. annual sales greater than $9 billion.
Generic drugs are typically priced at least 20% to 30% (and sometimes as much as 90%) less than the name-brand drugs. The prices of generic drugs are key to making many drugs affordable for millions of Americans and in holding down the costs to taxpayers for health programs such as Medicare and Medicaid.
One way that name-brand drug companies may compensate generic drug manufacturers to delay bringing their generic drugs to market is by paying them to settle their patent challenges that includes an agreement to delay the availability of the generic drugs. The FTC found that patent settlements that included a payment to the generic drug manufacturers caused an additional delay of 17 months (on average) for the generic drugs to become available.
During fiscal year 2011, there were 156 final patent settlements reached among drug companies. Of those, 28 contained a payment to a generic drug manufacturer and also restricted the generic drug manufacturer’s ability to market the generic drug. Of the 28 settlements containing payments to generic drug manufacturers, 18 were with generic drug manufacturers who were the first to seek FDA approval to market a generic version of a brand-name drug (referred to as “first fliers”) and were eligible at the time of the settlement to exclusively market the generic drug for a period of time, thereby precluding other generic drug manufacturers from providing generic versions of the name-brand drugs.
While the FTC has challenged some of the patent settlements in court as being anti-competitive and in violation of U.S. antitrust laws, Congress has been looking into legislation that would prohibit the pay-for-delay agreements which may reduce the federal deficit by $2.67 billion over 10 years, according to the Congressional Budget Office.
In this day and age when U.S. taxpayers and the federal government alike cannot afford to pay more for necessary prescription medications than is fair and reasonable, it seems to us that the pay-for-delay settlements between brand-name drug manufacturers and would-be generic drug manufacturers are outrageous and beyond greedy — people who need their medications may not be able to afford to obtain them simply because the payments from the name-brand drug manufacturers to the generic drug manufacturers that result in delays of affordable generic drugs unnecessarily raise the cost of prescription medications to consumers beyond their ability to pay. How can drug companies be allowed to put a price on people’ s health and lives? How can anyone justify such absolute greed that places profits over people?
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