Federal patent law gives patents owners exclusive rights to exploit their invention for 20 years from the date of first filing. (or 17 years from the date of issue if this occurs before June 1995). We thus assume that generic drug makers can manufacture and market drugs whose patents have expired. This leads to competitive pricing permitting generics, for example like omeprazole, (now over-the-counter) an antiulcer drug, to cost one-tenth the price of Nexium, its chemical equivalent!
But real life doesn’t always work that way. Major pharmaceutical manufacturers have increasingly sought and completed “pay for delay” business deals with generic drug marketers. In these disputed legal arrangements, now being argued in the courts, makers of name-brand drugs directly or indirectly pay generic makers to delay competition by keeping cheaper generics off the market for up to 17 months.
The Congressional Health Care bill already includes such a ban, but the Senate version does not. A group of nine Democrats, led by Herb Kohl of Wisconsin,urged in a letter last month to the majority leader, Harry Reid, that a ban be included in the final legislation.
In recent years deals between name-brand and generic makers have delayed the introduction of a range of generics including cancer drugs, antidepressants, and a whole range of anti-ulcer “prescription-strength drugs,” such as Nexium, the”Purple Pill,” noted above. According to the New York Times the Federal Trade Commission (FTC) has estimated that such deals currently cost American consumers $3.5 billion a year.“These are collusive, price-fixing deals,” said Representative Chris Van Hollen, Democrat of Maryland, “It means the consumer pays a lot more for their pharmaceuticals.” The price differences in fact are sometimes astronomical.
According also, to the New York Times, generics account for only about 22 percent of prescription drug spending in this country, although they represent nearly three-quarters of the prescriptions written, according to the research firm IMS Health. That means 78 percent of the nation’s drug bill goes toward the 22 percent of prescriptions written for name-brand medicines.
Jon Leibowitz, the chairman of the FTC, argues that many settlement deals violate antitrust laws.“These sweetheart deals are being done on the backs of consumers,” Mr. Leibowitz said. “From the perspective of the Federal Trade Commission, these deals are one of the worst abuses across the board in health care and should be stopped.”
For the sake of every American who goes to the pharmacy, let us hope the Senate includes this ban on “pay for delay” in the forthcoming health legislation.