Healthy Skepticism Library item: 18571

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Publication type: news

Ed.
Faint Progress on Drug Payoffs
The New York Times 2010 Aug 9
http://www.nytimes.com/2010/08/10/opinion/10tue3.html?_r=1

Full text:

Legislation that would end a devious tactic used by some pharmaceutical companies to delay the introduction of cheaper generic drugs squeaked by a Senate panel recently. Its prospects for ultimate passage remain cloudy unless Senate Democratic leaders aggressively seize the opportunity to save billions of dollars for the federal budget and hard-pressed consumers.

The underhanded tactic, known as pay for delay, occurs when a generic drug company tries to bring its product to market by challenging the patents on a brand-name drug. Rather than engage in a costly and unpredictable court battle, the brand-name manufacturer sometimes pays the challenger substantial compensation to delay marketing its drug, and the generic company often welcomes the easy, risk-free money.

Both companies profit. The consumer, unfortunately, loses – by paying high, brand-name drug prices instead of lower prices for a generic. The Federal Trade Commission, which has been campaigning to end the practice, estimates that pay-for-delay agreements cost consumers at least $3.5 billion a year.

The bill pending in the Senate, which was incorporated into a general government appropriations bill, is similar to legislation already approved by the House. It would greatly curtail pay-for-delay practices by presuming that such agreements are illegal and anticompetitive while leaving an opportunity for the affected companies to overcome that presumption in court.

On the merits, the bill deserves passage. But the proposal barely survived a challenge in the Senate Appropriations Committee when an amendment that would have dropped it from the broader bill failed to win a majority; it lost on a 15-to-15 tie.

Meanwhile, the problem has been getting worse. The F.T.C. found that there have been more such pay-for-delay settlements in the first nine months of the current fiscal year than in any entire previous year.

Congress, which has been cringing under intense lobbying from the pharmaceutical industry, has been dithering by adding or eliminating the proposal from various bills without ever driving the legislation to final passage. It is time to end the charade and pass this measure. The Congressional Budget Office estimates that it would reduce the federal deficit by $2.6 billion over the next decade, freeing up money for worthy programs that would otherwise be cut.