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House, Senate debate generic drugs
Roll of bills pours out pills.
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TEXT OF STORY
Kai Ryssdal: House and Senate leaders trooped down Pennsylvania Avenue to the White House again today. There was yet another epic meeting on the health care overhaul. To work out yet another difference between the House and Senate bills.
Today's wrinkle was generic drugs. Getting 'em to the market sooner and saving billions. Marketplace's Nancy Marshall Genzer reports.
NANCY MARSHALL GENZER: When the patent on a brand-name drug like Lipitor expires, competitors can start producing generic versions that are a lot cheaper. But there are often disagreements over when generics can be introduced. Rather than go to court, the branded drug makers pay the generic folks to delay their drugs. The Federal Trade Commission reported today that these so-called pay-for-delay settlements cost consumers $3.5 billion a year.
Jon Leibowitz is the chair of the FTC.
JON LEIBOWITZ: When companies makes these payoffs, they get a longer period of exclusivity. When companies receive these payoffs, they sit it out. And that's not good for consumers.
The House health care bill would outlaw pay-for-delay deals.
Congresswoman Mary Jo Kilroy, an Ohio Democrat, says the lack of generics hurts her constituents.
MARY JO KILROY: I've heard from people who have heart medications that have had an impossible time paying for their drugs, get half of their prescriptions.
But the pay-for-delay deals do have their defenders.
ERIK GORDON: I'm not sure it's an entirely good idea to outlaw them.
Erik Gordon is an economist at the University of Michigan. He says some pay-for-delay deals get generics out sooner because they avert lengthy court battles.
GORDON: So rather than a blanket ban, the test ought to be whether or not it's a legitimate settlement or an abuse.
An army of drug industry lobbyists is making the drugmakers' case on Capitol Hill. Leibowitz says there are more than 1,300 registered lobbyists for drug companies.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
I was always curious during the discussion of these types of things why the original patent holder stands to lose market share to the 'generic' manufacturers. Once the patent expires, the development costs should have been amortized - if the drug was properly priced. At that time, the original manufacturer has all the manufacturing expertise, tools and processes in place, marketing, distribution, etc. I would think it would be cheaper for them to produce the drug than anyone else, thus prolonging somewhat of a profitable situation. Or am I missing something?
A patent is a legal temporary monopoly. When the patent expires, unless there's no demand for the product, competing products should enter the marketplace pretty much immediately. If there isn't any competition, for instance because of a pay-to-delay deal like this, the company's monopoly is still there but is no longer legal. So deals like this should be the cause of lawsuits, not the means of avoiding them.
Erik Gordon assumes, apparently, that every generic production upon patent lapse will generate a lawsuit. That the American public should be bilked over $3.5 BILLION a year, after the 7 years Big Pharma has milked the patent with sky-high prices, is obscene. Allowing drug companies to advertise on TV has generated tons of demand, as they knew it would, and now people "doctor shop" until they find one who will write the 'script they want. And we wonder why our medical costs are twice any other industrialized country??? Oh, yeah, and let's not forget the ever-present lobbyists.
