OTHER VOICES
With the prices of many brand-name drugs up 6 percent in the last year, it's time for Congress to crack down on the slick maneuvers used to keep generic drugs off the market. Passage of the Preserve Access to Affordable Generics Act and the Citizen Petition Fairness Act would be a good start.
The first bill would stop major drug companies from paying generic manufacturers not to produce generic drugs. That's the pharmaceutical equivalent of General Motors paying Toyota to not make cars. It obliterates price competition.
To get around antitrust laws, such agreements are made under the fig-leaf of a legal settlement. The maneuver begins as the expiration date on a drug patent approaches. The big drug maker with the patent sues the generic manufacturer that plans to copy the drug.
Surprise! They reach a friendly settlement in which the big pharmaceutical company agrees to line the generic company's pockets with cash. In exchange, the generic company delays releasing its copycat drug.
From the companies' viewpoint, this is a win-win. The big drug company gets to keep its monopoly and high prices, and the generic company is paid to do nothing.
The big loser here is the consumer, since generics generally cost 50 to 70 percent less than name-brand drugs. Generics now account for 56 percent of prescriptions filled, but only 13 percent of drug costs. The more generics there are on the market, the more people will be able to afford medication.
The government thought it had squelched this underhanded maneuver in the 1990s. But it's back, protected by a recent appellate court ruling. The court said it was fine for Schering-Plough to pay $90 million to two generic drug manufacturers.
Such payments are chicken feed compared to what drug makers stand to lose if a major drug loses patent protection. Bristol-Myers Squibb's shares dropped 20 percent this summer when a generic company began producing a version of Plavix, quickly seizing most of the market. The company's blockbuster blood-thinner brings in $3.8 billion in U.S. sales alone. In August, a court ordered the generic company to back off.
Payoffs are just one of the ploys pharmaceutical giants use to delay introduction of generics. Another is the filing of "citizens petitions" by agents for patent holders. Such petitions slow the flow of generics through the pipeline by months or years while the FDA investigates the claims. The Citizens Petition Fairness Act would create penalties for filing bogus petitions and set a six-month limit on investigations.
Of the 21 petitions regarding generic drug applications filed since 2003, 20 were found to be without merit, according to the bills' sponsors, U.S. Sens. Herb Kohl, D-Wis., and Patrick Leahy, D-Vt. Kohl also is sponsoring the Affordable Generics bill.
Meanwhile, the FDA is facing a backlog of 800 applications to produce generic drugs. The number of applications has doubled in five years. The FDA is considering imposing a fee on generic drug companies to finance a faster approval process.
A drug patent lasts for 20 years, and that's long enough. It's certainly long enough for a drug company to recover its costs and extract a very nice profit. It's also long enough to encourage investment in new drug development.
But when the patent's time is up, it's up. Then it's the consumer's turn to get a break with the timely approval of inexpensive generic medicines.