From today's Washington Post:
Pharmaceutical lobbyists are also targeting Obama's plan, which includes administration proposals to secure an extra $10 billion in cuts from the industry and to ban deals between brand-name and generic drugmakers that keep cheaper medicines off the market
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http://www.washingtonpost.com/...
We all know that PhRma was jawboned into contributing an extra amount of at least $10Billion to further close the donut hole in Medicare, meaning PhRma will be contributing about $100Billion total. We also know that the drug re-importation bill could have saved consumers $80Billion http://www.dailykos.com/...
(Of course drug re-importation would have been difficult in practice as Canada would not have allowed all their drug supply to go to the US. Other countries control drug costs primarily by generics).
What we didn't know until this week is that, in response to an outstanding revelation on TPM in December by Zachary Roth, the White House is proposing to kill an anti-competitive scheme by PhRma which will save consumers $35Billion per year.
The scheme is a practice of drug companies paying off manufacturers of generic drugs to not make generics and to support extensions of brand name protections.
The medicine for this is a new White House proposal to make these practices subject to regulation by the Federal Trade Commission as anti-competitive practices!
In the past few years drug companies have come to rely on a surprisingly bold scheme to fend off generics: paying off generic manufacturers to not manufacture generics.
Strangely the main part of this scheme is patent litigation. The holder of a patent sues the maker of a generic as soon as it's approved to come to market for patent infringement. But in the settlement instead of the generic maker having to pay damages to the brand name manufacturer, the brand name pays the maker of the generic in exchange for an agreement to delay the generic from coming to market.
Of course the patent holder fears it's patent won't hold up in court, as many don't. More important it runs counter to the Hatch-Waxman Act of 1984, which sought to speed the path of generics to market
These deals have become so common recently they've been given the name Pay-for-Delay.
That was made more or less explicit by Frank Baldino, the CEO of Cephalon, which makes the sleep-disorder drug Provigil. In a 2006 interview, Baldino trumpeted recent deals with four generic drug-makers that kept generic versions of Provigil off the market until 2012, declaring: "We were able to get six more years of patent protection. That's $4 billion in sales that no one expected."
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.
Part of the blame lies with the Bush administration. 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.
http://tpmmuckraker.talkingpointsmem...
The FTC has made killing such deals a priority by filing to block such deals. The (slim) hope was that the Supreme Court would rule that such deals were illegal under existing anti-trust law. More likely this SCOTUS would hold the FTC did not have such authority.
But the FTC has also been pushing for incorporation of a tweet to Hatch-Waxman explicitly banning pay-for-delay in the HCR bills.
This week the White House explicitly embraced that proposal:
Another piece of the proposal would allow the Federal Trade Commission (FTC) to regulate the interactions between brand-name and generic drug companies. At issue is the revelation that brand-name drug companies have been paying off generic drug companies for support on patent extensions for certain drugs. This means that consumers will see serious delays in the release of certain generic drugs and therefore still face the higher costs of brand-name drugs. The FTC is filing suit against the drug companies to end this practice and the White House proposal aims to give the FTC authority to regulate and end this practice. The summary of the proposal states that the White House would, “[make] anti-competitive and unlawful any agreement in which a generic drug manufacturer receives anything of value from a brand-name drug manufacturer that contains a provision in which the generic drug manufacturer agrees to limit or forego research, development, marketing, manufacturing or sales of the generic drug.” The White House claims that payouts to generic drug companies cost consumers up to $35 billion a year.
http://assets.sunlightfoundation.com...
(Both the sunlight and the TPM articles are essential reading).
PhRma's response to this proposal?
Patent settlements between brand-name and generics companies can resolve expensive patent disputes to help foster innovation and improve access to medicines so that patients can live healthier, more productive lives.
Law and public policy have always favored settlements, including patent settlements. PhRMA continues to believe that legislation that would impose a blanket ban on certain types of patent settlements or otherwise prevent them could decrease the value of patents and reduce incentives for future innovation of new medicines. This is also unnecessary because the Federal Trade Commission (FTC) and others already have the authority to review and evaluate any patent settlement agreement between a brand name company and a generic company. The courts and enforcement agencies like the FTC are in the best position to review these settlements on a case-by-case basis to ensure that they are not harmful to competition. By imposing a general ban or imposing harsh disincentives, pending legislation would effectively remove the decision-making process from this appropriate venue.
Whatever else, you have to admire PhRma's chutzpah.
While there are many many imperfections in the general HCR proposals But this is a proposal that we should support strongly and make sure this part is passed. It's something that may not grab headlines or interest but will save consumers $35 Billion per year.
In the absence of other real cost controls in HCR, this new proposal is critical.
Please rec & talk this up as something we have to get passed. It's a no-brainer that will fail only if there's no vocal public support to counter the push PhRma has now announced against it.