American consumers may have intentionally been denied access to lower-cost prescription drug alternatives from October 2010 through September 2011, according to new data released Oct. 25 by the Federal Trade Commission.
According to an overview of industry data released by the FTC, an independent arm of the U.S. government, in fiscal year 2011, pharmaceutical companies continued a recent anticompetitive trend of paying off potential generic drug manufacturing rivals to delay the introduction of lower-cost prescription alternatives into the market.
The FTC staff report found that drug companies entered into 28 potential pay-for-delay deals in fiscal year 2011 – which lasted from Oct. 1, 2010 through Sept. 30, 2011. The figure nearly matches last year’s record of 31 deals and is higher than any other previous year since the FTC began collecting data in 2003. Overall, the agreements reached in the latest fiscal year involved 25 different brand-name pharmaceutical products with combined annual U.S. sales of more than $9 billion.
When generic alternatives of brand-name drugs aren’t available in the marketplace, drug scarcity can crop up, often leading to higher prices for consumers.
“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 FTC chairman Jon Leibowitz in a statement released by the commission.
Leibowitz recommends that Congress fix this problem by going after drug companies engaging in these practices to lower overall drug costs for consumers and for the government since drug prices contribute greatly to Medicare and Medicaid spending. 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.
Leibowitz says the new Joint Select Committee on Deficit Reduction – known as the “Super Committee” – could take action on the issue to save the government and taxpayers billions of dollars.
The cost of prescription drugs is a growing concern for average Americans, especially elderly individuals on a fixed income.
A September Consumer Reports survey found that 30 percent of U.S. consumers that take at least one prescription on a regular basis take “significant” medication risks due to financial concerns over prescription drugs. For example, the percentage of respondents who reported skimping on medication and other healthcare services rose from 39 percent in 2010 to 49 percent this year – the largest increase in three years.
The FTC, created in 1914, is charged with investigating and preventing deceptive trade practices.
In recent years, certain brand-name companies have paid or otherwise compensated generic firms to settle their patent challenges, which has caused delays in the introduction of lower-cost medicines to the U.S. drug market.
The FTC has challenged a number of these patent settlement agreements in court, contending that they are anticompetitive and violate U.S. antitrust laws. The agency also has supported legislation in Congress that would prohibit pay-for-delay settlements that increase the cost of prescription drugs.
According to the new staff report, companies reached a total of 156 final patent settlements in fiscal year 2011 – a huge increase from only 14 settlements in fiscal 2004. Of those total settlements, 28 contained a payment to a generic manufacturer and also restricted the generic’s ability to market its product.
Of those 28 settlements over generic drugs, 18 involved generics that were so-called “first filers,” meaning that they were the first to seek approval from the Food and Drug Administration to market a generic version of the branded drug, and, at the time of the settlement, were eligible to exclusively market the generic product for period of time. Because of the regulatory framework, when first filers delay entering the market, other generic manufacturers can also be blocked from entering the market, which makes such patent settlement deals particularly harmful to consumers.
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I encourage you to visit the Federal Trade Commission website to view the original press release and full report for more information about this topic: http://www.ftc.gov/opa/2011/10/mma.shtm.
-Emily