Thursday, December 3, 2009

What A Pill

Zachary Roth at TPM Muckraker uncovers the method drug companies use to keep generic versions of expensive name-brand drugs off the market: bribery.

Over the last few years, drug-makers have embraced a startlingly simple tactic for fending off competition from generic brands: paying them off. In a nutshell, the company that holds the patent on a profitable drug strikes a deal with the maker of the cheaper generic brand: you hold off on marketing your generic for several years, and in return, we’ll give you a share of our profits on the drug.

So common have these deals become lately that they’ve been given a name: pay-for-delay. The approach — a textbook anti-competitive tactic — is worth billions to drug-makers, because it essentially allows them to buy more protection than their patent confers.


But pay-for-delay doesn’t work out nearly so well for consumers. Generics are sometimes priced as much as 80 or 90 percent cheaper than the name brands. For instance, the cholesterol drug Zocor costs $164 a month, while a generic version costs just $12 a month. Pay-for-delay deals will cost consumers an extra $35 billion over the next decade, by keeping those cheaper generics off the market, according to a recent Federal Trade Commission study. And it’s the uninsured, who pay out-of-pocket for drugs, that disproportionately pay those costs.

And it’s perfectly legal.

A series of court rulings in 2004 made pay-for-delay much more common, with the result that in 2006 and 2007, nearly half of all deals between generic brand-name drug-makers involved a payment to the generic maker in exchange for a promise to stay out of the marketplace, according to the FTC study. On several occasions, the Bush Justice Department declined to weigh in on the side of consumers by urging the Supreme Court to clarify the law, as it could easily have done.

Big Pharma is defending pay-for-delay as a way of actually saving money by keeping patent lawsuits out of the court — the cost of which would be passed on to the consumer, naturally — so they can “foster innovation and improve access to medicines so that patients can live healthier, more productive lives.” And the longer they live, the more of their name-brand drugs they will buy. Better living — for them — through chemistry.

Congress is looking into adding legislation into the healthcare bill that would address the issue; after all, one of the big issues in the debate has been how to control the cost of healthcare, but with over 1,700 lobbyists from the pharmaceutical industry vultching around Capitol Hill, I wouldn’t hold my breath waiting for them to do anything about it. It’s the one thing Big Pharma and the generic drug makers agree on: it’s a license to print money for both sides.