Jon Leibowitz, a member of the Federal Trade Commission (FTC), said the big pharmaceutical companies are causing consumers to pay much higher prices than they should for drugs by engaging in a practice whereby they pay manufacturers not to produce generic drugs for several years after patents expire.
Mr. Leibowitz told the Senate Judiciary Committee on Wednesday, "Such settlements restrict competition at the expense of consumers, whose access to lower-priced generic drugs is delayed, sometimes for years."
In 2006, according to Mr. Leibowitz, there were 14 cases of these so-called reverse payments where deals were struck between large pharmaceutical companies and generic drug producers.
Sen. Patrick Leahy (D-Vt.), the chairman of the Judiciary Committee, has sponsored legislation that would ban these types of payoffs in the future.
"Congress never intended (the Hatch-Waxman Act of 1984 and the Medicare Modernization Act of 2003) for brand-name drug companies to be able to pay off generic companies not to produce generic medicines," he said. "That would be a shame, harmful to consumers, and a crime."
Representatives of the Pharmaceutical Research and Manufacturers of America (PhRMA) said that disallowing the practice could wind up causing consumers to pay even higher prices and possibly delay new products coming to market quickly.
Billy Tauzin, president of PhRMA, said that by eliminating the payments, generic producers would find it more difficult to challenge patents in courts. The payments made by the major pharmaceutical firms actually helps to subsidize this activity and, in turn, works to bring generic alternatives to consumers more quickly.
The Star-Ledger of Newark, NJ said that while generic manufacturers are often at odds with the brand companies, there is some agreement on this issue.
The Generic Pharmaceutical Association (GPhA) said patent settlements on a case-by-case basis as is the current practice are beneficial to consumers.
In a press release response to the hearings this week, Kathleen Jaeger, president and CEO of GPhA, said, "Many of the settlements discussed at today's hearing guaranteed early market entry -- and that's pro-competitive and pro-consumer. It is critical that as we continue this discussion we do not inadvertently sweep good settlements in with the bad ones. A case-by-case approach protects consumers by evaluating the market implications of a particular settlement. Doing so would preserve the right avenues that allow generics to enter the market, saving consumers and the healthcare system billions of dollars annually.?h
The FTC's Leibowitz is not buying the arguments of the PhRMA or GPhA. Reverse payment deals, he maintained, are negotiated at the expense of consumers. "The implications of these developments for consumers, and for others who pay for prescription drugs, are serious," he said.
In a recent case involving Bristol-Myers Squibb, the company offered $40 million to have Apotex of Canada delay its generic launch of the blood-thinner Plavix. The deal fell through, however, and Apotex began selling its generic version of Plavix in August. Shortly after its introduction, Apotex's product captured 75 percent of the Plavix market.
Currently, Apotex is barred from selling the medicine until a case involving it and Bristol-Myers Squibb is decided in federal court.
Discussion Questions: Ultimately, are reverse payments to the advantage of consumers when it comes to having access to affordable prescription medicines? What should the position of retail pharmacists be on this issue?