Sunday, April 30, 2006 | 7:19 a.m.
In the late 1990s the Federal Trade Commission took steps to stop brand-name drug companies from paying off generic drug rivals to delay the release of cheaper medicines into the market. The FTC ruled that the deals were anti-competitive and anti-consumer when it implemented measures to thwart the practice. But The Washington Post reports that a number of big drug companies have promptly returned to the tactic after two federal appeals court actions last year ruled the FTC had overreached its authority.
In the wake of the court actions, the FTC this past week revealed that it had uncovered seven examples already this year of drug companies paying generic makers so that the cheaper medicines would not be available to the public. Commission officials said they would ask the Supreme Court to review the matter, in hopes of permanently banning the practice.
The quiet deals are good for the brand-name drug makers, which effectively kill off the competition with modest cash payoffs and continue to reap huge profits. The brand-name drug makers, which typically enjoy 20-year patents before generics are allowed into the market, have much to gain by extending their monopolies for even a few years.
Take the case of the sleep-disorder drug Provigil, which is made by Cephalon Inc. Four generic companies recently dropped challenges to bring their medicines to market after Cephalon gave them $136 million to hold off for five more years - which should net Cephalon an extra $4 billion in sales. Bristol-Myers Squibb Co. and Sanofi-Aventis, makers of the blood thinner Plavix, also paid off a generic rival to delay its drug until 2011, costing consumers hundreds of millions of dollars, FTC Commissioner Jon Leibowitz says.
To get an idea of the kinds of savings that consumers see from generic drugs, even though 53 percent of U.S. prescriptions are filled with these cheaper prescriptions, they account for just 12 percent of the $250 billion that Americans spend on drugs annually.
Prescription drugs increasingly account for the rising cost of health care, including here in Nevada. Our state government recently went to the extreme step of approving guidelines that will allow this state's residents to get U.S.-approved prescription drugs through the mail from pharmacies in Canada, where the cost of drugs is much cheaper.
We hope the Supreme Court takes up the issue of brand-name companies cutting deals with generic makers, and that it throws out the lower court ruling and sides with consumers in stopping these outrageous payoffs.
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