More Patients Being Ripped off by Pay-for-Delay

We have previously written about this, but it keeps getting worse and worse. According to the Federal Trade Commission (FTC):

Brand-name pharmaceutical companies can delay generic competition that lowers prices by agreeing to pay a generic competitor to hold its competing product off the market for a certain period of time. These so-called “pay-for-delay” agreements have arisen as part of patent litigation settlement agreements between brand-name and generic pharmaceutical companies.

“Pay-for-delay” agreements are “win-win” for the companies: brand-name pharmaceutical prices stay high, and the brand and generic share the benefits of the brand’s monopoly profits.

Consumers lose, however: they miss out on generic prices that can be as much as 90 percent less than brand prices. For example, brand-name medication that costs $300 per month might be sold as a generic for as little as $30 per month. [This means that for one drug, patients may be paying 12 times $270, or $3,240 more per year, because of the pay-for-delayed availability of the generic version.]

… Agreements with compensation from the brand to the generic on average prohibit generic entry for nearly 17 months longer than agreements without payments, where the average is calculated using a weighted average based on sales of the drugs. Most of these agreements are still in effect.

The chart above, based on data from the FTC, shows a rapid escalation in the number of times brand-name companies have, in essence, bribed generic companies to delay the introduction of the generic drug.

In the six fiscal years from 2004 through 2009, there were a total of 66 pay-for-delay agreements (or as they politely refer to them, settlements) wherein brand-name companies paid generic companies to delay the availability of generic drugs. In the past two years alone, there have been 59 of these agreements, almost as many as in the previous six years. As the chart shows, the projected cost to Americans of this legalized bribery amounts to $35 billion over the next 10 years. What can be done to stop it?

The answer is relatively simple to describe. The FTC has supported legislation to block business deals in which makers of brand-name drugs directly or indirectly pay generic drugmakers to delay competition from cheaper generic alternatives.

But there is not enough zeal, appetite and freedom from drug industry influence in the Congress to pass such legislation. You might want to ask your representative and senators why they are not strongly supporting such legislation (e.g., Senate Bill 27, the Preserve Access to Affordable Generics Act). There are no acceptable answers to that question.