Finance Globe

U.S. financial and economic topics from several finance writers.
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FTC: Drug Makers Continue to Delay Cheaper Generics for Consumers

Many cost-conscious Americans choose to opt-out of the prescription drug benefit with their health plan in order to save on their premium. I’m one of them. I’m generally healthy and don’t need medications on a routine basis - it only makes sense.

I pay out-of-pocket for any medications prescribed to me, and I often skip filling the prescription altogether if I feel I don’t really need what the doctor ordered. So far no problems.

But when I do fill these prescriptions, I always ask for the generic equivalent. Sometimes I can save a bundle, and sometimes I’m stuck paying for the name brand drug because there is no generic version.

If the drug is a newcomer to the market, that’s perfectly understandable. The developer of the product had to invest many years of research and plenty of money to find a cure for what ails me. They have the right to earn appropriate compensation and make their shareholders happy by being the only game in town for a number of years.

But some drug designers are going too far. According to the Federal Trade Commission, some pharmaceutical companies are still paying off generic drug makers to delay the release of the cheaper generic version - a practice that has been going on in recent years.

Generic drug prices are typically at least 20 to 30 percent less than the name-brand drugs, and in some cases are up to 90 percent cheaper - and the FTC estimates that these pay-to-delay deals are costing Americans about $3.5 billion a year in the form of higher prescription costs. And it’s not just affecting the individual who is paying for their own medications, it takes tax dollars going towards Medicaid and Medicare patients.

The FTC reported that the number of pay-for-delay deals skyrocketed 60 percent from 19 in fiscal year 2009 to 31 in fiscal year 2010.

FTC Chairman Jon Leibowitz said in a statement alongside the 2010 report, “The increasing number of these deals is a win-win proposition for the pharmaceutical industry, but a lose-lose for everyone else.”

And nearly as many of these deals caught the FTC’s attention this year. From October 1, 2010 through September 30, 2011, the agency found 28 potential pay-for-delay deals that kept generic drug makers from producing and releasing the cheaper version of 25 different drugs - with combined annual sales of $9 billion. An FTC study found that patent settlements that include a payment or other compensation delay generic entry on average by 17 months longer than those that do not include a payment.

“While a lot of companies don’t engage in pay-for-delay settlements, the ones that do increase prescription drug costs for consumers and the government each year,” said Leibowitz.

The FTC says these deals are anti-competitive and violate U.S. antitrust laws, and has supported legislation in Congress that would prohibit pay-for-delay settlements that increase the cost of prescription drugs. According to the Congressional Budget Office, proposed legislation would reduce the federal deficit by $2.67 billion over 10 years.

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Saturday, 13 April 2024

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