Representatives of brand-name drug companies and their generic counterparts may need a pain reliever after Monday's U.S. Supreme Court decision. The Court has given the Federal Trade Commission (FTC) the authority to challenge deals between drug-makers to keep generic drugs off the market for certain time periods.
Such arrangements allow the brand-name manufacturers to make more money as their patents expire, but the FTC has said these "pay for delay" arrangements cost people who use the drugs $3.5 billion a year.
According to Leigh Purvis, senior strategic policy adviser at the AARP Public Policy Institute, it's one of many ways drug companies shore up their profits.
"We take a lot of what the drug industry does as, 'Yeah, this is just the cost of doing business,' and it isn't necessarily illegal, but it also isn't necessarily something that has to happen," Purvis remarked. "So, you kind of have to get into the mindset that maybe we could try to stop some of this behavior."
AARP filed a brief in the Supreme Court case supporting the FTC's position. The high court ruling doesn't mean pay-for-delay deals are illegal, only that they'll now be subject to more scrutiny.
Generic drug companies like the pay-for-delay strategy, because it minimizes their risk of being sued if they infringe on an expiring patent. Purvis said AARP views it through the eyes of those who have to pay more for the medications they need.
"From AARP's perspective, we would really like to see pay-for-delay deals go away," she stated. "I think people also need to be wise consumers of their prescription drugs. It really does benefit people to take a look at what they're taking and maybe talk to their prescriber to see if there's a less expensive option available."
Last week, AARP's Public Policy Institute released a case study on pricing of the popular cholesterol drug Lipitor, made by Pfizer. It said that in the five years before Lipitor's patent expired in 2011, its price continued to climb. Purvis called Pfizer's approach "unusually aggressive."
"The price increases that were taking place occurred while they were officially or supposedly under a pay-for-delay deal - which means not only were they holding a generic effectively off the market, but they were also increasing their prices at, say, 17.5 percent in a year, just kind of adding insult to injury," as she characterized the situation.
The report alleges that, in addition to pay-for-delay agreements, rebates were offered to insurance companies to reject claims for generic equivalents and prompt more Lipitor prescriptions. Pfizer says it also offered discounts to consumers.
June 18, 2013/Chris Thomas, Washington News Service
Image: Lipitor is the topic of a new AARP Public Policy Institute "Rx Price Watch" report on how it is marketed and priced. Photo credit: iStockphoto.com.