As patients and consumers, we face more and more choices about our health care each year.

We all support consumer empowerment in decisions about their care, but consumers don’t always have all the information they need to choose between different prescription drugs.

And the billions of dollars that the drug industry spends on advertising to patients and doctors is designed to make things worse. Industry advertises expensive new drugs, but not equally effective and lower-cost alternatives.

But trends are changing. State laws promoting the use of generic medications have saved consumers hundreds of billions of dollars. Employers are educating their employees to emphasize value — getting an equally effective drug that costs one-tenth as much as a brand-name option. For example, skipping the $200-a-month Nexium, and choosing Prilosec — made by the same manufacturer with the same active ingredient — for just $27.

Whether you or your organization’s members are uninsured, have high copays, or just want to be sure to get the best value for their health care dollar, these resources can help advocates, doctors, and patients make better choices for their health – and their wallets.

The Truth About Generics – safe and affordable

Generics are as safe and effective as their brand-name counterparts, but can cost 90 percent less. Go here to see why generic drugs are an affordable option used by nearly all patients.

New Generic Drugs Coming this year, and next!

Is your drug going generic soon? Dozens of expensive brand-name drugs like Cipro and Provigil have become generic, and their prices are dropping… Generic Plavix costs less than $15 even without insurance. See this year and next year’s newest generic drugs.

Uninsured? Here are some ultra-low cost options

Go here to see why, and see how you can find hundreds of drugs for $4 or $5 — many of the same drugs that you may be taking now, available at a lower cost. And learn why drug costs can vary so much from pharmacy to pharmacy.

If an expensive brand name drug is your only option, and you meet other insurance and income qualifications, a local hospital or community health center may be able to help you find low cost medicines. Find out more here.

Is that drug coupon a good thing? Maybe not!

Did you find a coupon by a drug manufacturer online? You should think twice about using it to make Nexium or some other drug more affordable. Read this to see how these coupons can actually turn over your personal private health information to the drug company, and cost you more in the long run. If you have drug coverage through Medicare or Medicaid, using a manufacturer coupon is prohibited by federal law.

Please help us share these resources!

These consumer resources were created through the generous support of the California HealthCare Foundation, and are intended to be shared freely with the public, including on other organization’s websites.

Please contact us at wwilkinson(at)communitycatalyst.org if we can help you share these resources with your members, assist you posting them on your website, or if you want to host a guest blog on ways to find affordable medications.

– Wells Wilkinson,  Project Director
Prescription Access Litigation

Reposted from the Community Catalyst blog Health Policy Hub ….

As we discussed here last week, the U.S. Supreme Court is currently deliberating over whether pharmaceutical companies can collude to reap $3.5 billion a year in excess profits from American patients. Named FTC v. Actavis (and informally referred to as “The Androgel Case”), this case addresses whether it was legal for a brand name company to pay its generic competitor to delay generic Androgel from coming to the market. Why does this matter to you? Because the generic is up to 10 times cheaper than the brand name drug and Androgel is not the only brand name drug where a generic has been delayed. As Columbia University professor Scott Hemphill puts it, “[A] pay-for-delay settlement transfers wealth from consumers to drug makers, in the form of continued high pharmaceutical prices, with brand name firms sharing a portion of that transfer with the generic firm.”

The decision in this case would have far-reaching impact on the price of at least 140 different drugs whose costs have remained high because of such back-room deals. Since the Court heard oral arguments in the case last Monday, the Washington Post, Boston Globe, and smaller newspapers such as Sonoma County’s Press Democrat have all come out in agreement with us: these payments have to stop. Why?

The financial burden of monthly out-of-pocket drug costs has forced millions of Americans without drug coverage to cut back on taking their drugs or delay other health care. Even if you have insurance, co-pays for a brand name drug whose generics have been blocked can be a significant hardship—and your insurance company pays more, too. For example, the price of the drug Provigil skyrocketed from $300 a month in 2007 to over $1,000 per month in 2010 because in 2005 and 2006, Provigil’s manufacturer, Cephalon Corp. paid $136 million to four different generic drug companies to delay generic Provigil for 6 years—while Cephalon made more than $3 billion on U.S. sales of Provigil. In response, many insurers stopped covering the drug, forcing consumers onto Cephalon’s new drug “Nuvigil,”which many consumers reported to be less effective.

Meet two patients whose lives were turned upside down by the pay-for-delay deals that kept generic Provigil off the market:

Tanna

A state librarian in Fayetteville, MI, Tanna has been taking Provigil for more than ten years to treat idiopathic hypersomnia, a disease causing excessive sleep. Her son has narcolepsy, a related disease. When Tanna’s son first received his diagnosis, he was on Provigil as well, but Tanna’s insurance company forced them both to switch to Nuvigil. Neither of them could tolerate the drug and her son successfully switched to an ADHD drug for his symptoms, but Tanna has tried everything and Provigil is the only drug that works for her.

Much of Tanna’s suffering ended after she was diagnosed and prescribed Provigil. She has obtained her Master’s in Library Science and is able to work – as long as she takes her medicine.

While Tanna says Provigil has given her life back, its high price exacted a toll in return. Instead of decreasing with time, Tanna’s copay more than doubled from $35 a month in 2005 to $75 a month in 2009.

“If ten years ago, someone told me the percentage of my salary I’d be paying a month in health-related costs now, I’d say they were crazy,” Tanna said.” We’ve managed to pay our bills, but I have no savings, no safety net. We’ve done what families do – we’ve used credit cards. There’s no way I can ever think of retiring, but I always wanted to work, so I guess I’m getting my wish.”

While her doctor promised there would be a generic version of Provigil in2008, she has only seen the price reduced in the past three months (her copay is now down to $12 a month).

Tanna knows the Supreme Court decision will greatly affect everyone who relies on prescription drugs.

“If they [the drug companies] win this case then they can do whatever they want. Forever,” she said. “We’re screwed.”

Karen

Prior to Karen’s diagnosis with multiple sclerosis (MS), she barely took an aspirin. In the eight years since her diagnosis, Karen, a busy mother of three, has relied on Provigil. Unfortunately, while Provigil gives Karen the energy she needs to function, it is prohibitively expensive. A resident of Clarkston, MI, she served as a worker’s compensation administrator at a major automobile company until her MS forced her to stop working in 2005. When Karen stopped working, she had two mortgages and three young children. As she discussed with Ed Silverman on Pharmalot, between 2007 and 2010 the price Karen paid for Provigil more than doubled, from $7.26 a pill to $16.87 a pill (with her insurance company paying half). During this time, she was unable to afford her prescription in addition to her normal household expenses, either skipping doses or splitting pills to reduce costs.

In 2011, Karen had a major MS relapse. While crippled by fatigue, she was overwhelmed by the price of Provigil – she could not afford to continue paying for her medicine out-of-pocket, so she had to stop taking it, despite her doctor’s recommendation.

Since a generic version of the drug was released in October of last year, Karen has been able to take her full dose and pays only $16 every three months. The release of generic Provigil and its lower cost has enabled Karen to lead an active life, spending more time with her family, volunteering at church and even hosting a Japanese exchange student.

The Rest of Us

Tanna and Karen are not alone – if you’ve paid for Androgel, Augmentin, BuSpar, Cardizem, Cipro, K-Dur, Nolvadex (tamoxifen), or Provigil, it is almost certain you’ve paid too much because of pay-for-delay deals based on records from the FTC and other lawsuits. Legal scholars and experts also suspect (the documents are secret) that pay-for-delay agreements have delayed generic versions of nearly fifty more drugs, including Lipitor, Plavix, Nexium, Zantac, Effexor XR, Lamictal Cipro, Adderall XR*, Wellbutrin XL (150 mg), Provigil*, Altace, Niaspan, Nolvadex (tamoxifen), Caduet, Zantac and many others (see full list in box).

If you have paid for one of these drugs in the last few years, you too might have been fleeced by a pay-for-delay agreement that kept a generic off the market. Please share your story with us, like Tanna and Karen did, and join them in the fight to stop these unfair deals, once and for all.

Khadijah M. Britton, JD, Program and Policy Associate

Today, the U.S. Supreme Court heard oral arguments in a lawsuit about a drug company’s ability to pay a competitor to keep a generic drug off the market—so-called “pay-for-delay” settlements. Unfortunately, most of the arguments dealt with how corporations do business, and not how these deals affect consumers. Nevertheless, Justices Elena Kagan and Sonia Sotomayor both acknowledged the potential for consumer harm. We at Community Catalyst think this decision will affect the affordability of prescription drugs for millions of Americans.

What is the lawsuit about?

The lawsuit, Federal Trade Commission (FTC) v. Actavis (informally referred to as “The Androgel Case”), is the government’s challenge to what former FTC Chairman Jon Leibowitz has called “an epidemic” of brand name drug companies paying competitors to delay launching a new generic version of a brand name drug. According to annual reports by the FTC, 165 of these secret deals have blocked generic versions of 140 different brand name drugs.

Delaying competition from generics is the highest priority for brand name drug makers trying to hold on to their profits. A decade ago, brand name drug makers would file one patent infringement lawsuit after another, to delay a generic as long as possible. But Congress put a stop to this in late 2003, requiring all patent challenges be brought at the same time.

So the brand name drug industry shifted to a new tactic – paying their competitors to delay generics. Under anti-trust law, paying off your competitors is clearly prohibited. But the drug companies have muddied the waters by dragging patent litigation into their dealings.

Unfortunately, the incentive for drug companies to collude is enormous because these pay-for-delay agreements are a win-win for brand name and generic manufacturers. Brand name companies continue to charge high prices and make billions or hundreds of millions on their blockbuster drugs, while the generic company is paid from these high profits to put their generic drug aside and do nothing.

The all too clear losers are consumers, who miss out on the chance for lower-priced generics, or who are forced to pay higher premiums to cover all the health plan members who do take an affected drug.

Delaying generic versions of a drug has serious financial and health impacts on individual patients.

A 2010 FTC report estimates when a pay-for-delay agreement affects just one drug, it can cost each consumer, and his or her health insurer, an extra $4,500 over a year and a half. If the consumer takes more than one drug, the costs could be inflated by $9,000 during the same time period.

For instance, Provigil’s manufacturer, Cephalon Corporation, paid $136 million to four different generic drug companies, who then agreed not to sell a generic version of Provigil for six years. During that time, Cephalon made more than $3.1 billion on Provigil sales. While the drug companies profited, consumers were devastated as the price of Provigil skyrocketed from $300 a month in 2007 to more than $1,000 per month in 2010. As a result, Cephalon was sued by the FTC and class-action attorneys on behalf of consumers.

Indirectly, all our health care premiums and other health care costs have also gone up because pay-for-delay deals have forced our health plans to pay up to ten times as much for a brand-name drug that has no generic. For example, brand-name drugs like Lipitor and Plavix cost more than $200 a month, but their generics versions cost less than $20. Many suspect pay-for-delay deals blocked generic Lipitor and Plavix for several years, while consumers and health plans wasted billions on these two best-selling blockbuster drugs.

The FTC, the U.S. Department of Justice, Attorneys-General in 36 states and consumer advocates have all asked the court to end this practice and allow the nation’s antitrust laws to do their job to restore competition and help lower prices.

The Prescription Access Litigation project at Community Catalyst has helped consumers and insurers file class action lawsuits to challenge pay-for-delay deals that have blocked consumer’s access to affordable generic versions of the drugs Provigil, Cipro, Oxycontin, K-Dur, and Tamoxifen. We have also helped dozens of consumer advocacy, senior, labor and patient groups join legal briefs or support reforms in Congress.

For more information on Pay-for-delay agreements, go here. To tell us ‘Your Story’ about one of these drugs, or any other drug you cannot afford, go here.

During the last few years of recession, the brand-name drug industry has continued to charge higher and higher prices. In 2009, brand-name drug prices rose an average of 9%, while the recession kept prices in  nearly every other sector from rising, according to an AARP study. On the other hand, generic drugs, which cost between one-third and one tenth as much as brand-name drugs, have been dropping in price, including an 8% drop, on average, for the most widely used generics in 2009, according to AARP. Generics have been a life-saver for many patients, while saving the US health system an estimated $824 billion since 2001.  

But recently, some shortages of certain generic drugs have started to develop. A op-ed in this Sunday’s NY Times warns that over a third of  “the 34 generic cancer drugs on the market” were “in short supply . . . as of this month . . . .” The author, oncologist Ezekiel Emanuel, attributes a tenth of these shortages “to a lack of raw materials and essential ingredients” but then notes that  

“[most of the shortages] appear … to  be the  consequence of corporate decisions to cease production, or interruptions in production caused by money or quality problems, which manufacturers do not appear to be in a rush to fix.”

Dr. Emanuel speculates that a 2003 law regulating physician reimbursement for drug costs is the key obstacle a new generic drugmaker responding to a shortage by launching their own competing drug. But what’s missing is any explanation of how this a US drug pricing law, which affects primarily US seniors covered Medicare Part-B, has such a broad, market-wide, or even global effect upon the global manufacturing and supply of these essential cancer drugs. Don’t patients covered by health systems in Europe, Japan, and other countries, need, and pay for these drugs too?

We should also not overlook the benefits of the 2003 law that Dr. Emanuel cites. This law, the Medicare Prescription Drug, Improvement and Modernization Act of 2003, was passed to move Medicare Part-B reimbursement from the fictitious industry-created list price, called the “average wholesale price” to a realistic, evidence-based price benchmark based on average sales prices, plus 6%.  Dr.  Emanuel asserts that linking reimbursement to an average-plus-6% in effect limits the  growth of a generic drug’s price to only 6% every 6 months, because that’s how frequently the average sales prices are currently calculated.

While there may be some merit to this  critique, let’s not forget that Congress enacted this law in response to the multi-billion dollar AWP drug-pricing fraud by dozens of drug makers upon Medicare Part-B and private insurers. From the early 1990s until at least 2001, drug makers promoted hundreds of  their doctor-administered drugs by inflating the drug’s list price, called the ‘average wholesale price’ which was used by Medicare and private insurers to reimburse the doctor. Drug companies pitched to  doctors that their practices would reap far higher profits using a drug with an inflated price. This was called ‘marketing the spread.’ For years, doctors bought the drugs at a much lower price, and then kept the profits, costing our health system billions. At the same time, many cancer patients, struggling with their serious illness, were forced to pay higher and co-payments if they had insurance, and high out-of-pocket costs if they were uninsured. And patients’ medical care was subverted by the inappropriate financial incentives which amounted to hundreds of thousands of dollars a year for some doctors.

The 2001 PAL Average Wholesale Price lawsuit, following on federal government investigative reports, helped to highlight this problem, and led Congress to enact  the Medicare Prescription Drug, Improvement and Modernization Act of 2003. This law changed Medicare Part-B reimbursement from the fictitious industry-created “average wholesale price” to a more evidence-based price benchmark based on average sales prices.

Over 28 drug makers agreed to settle the litigation by the private sector for $125 million. Other lawsuits with other defendants for the same type of AWP-related pricing fraud upon consumers and the private sector have also been settled. But even the combined $860 million in total settlements of AWP fraud cases cannot protect consumers from the costs of increased premiums, and reduced quality of care as this 2003 law continues to do.

While the system for Medicare’s reimbursement of generic cancer drugs may need some corrections, such as a more rapid monthly or quarterly reporting of price data to incentivize new generics to fill any supply gaps, we should not remove the 2003 law’s common-sense protection that prevents drugmakers from gaming the system of government reimbursement.

Along these lines, some state Medicaid programs have started to move to similar evidence-based “average sales price” systems for pharmacy reimbursement as well.  Our health system should pay doctors and pharmacies prices that are closer to their actual costs, and not fictitious amounts cooked up by drugmakers for their own duplicitous ends.

 Harms to competition, and to consumer choice, cost, and privacy cited.

Community Catalyst joined Consumer Union, US Pirg, the National Consumer Federation, and NLARx to ask the FTC to order CVS-Caremark to undo the four year old merger between the CVS pharmacy chain and Caremark, one of the nations largest pharmacy benefits managers.

The letter, covered in today’s New York Times, describes how CVS has used their role as a pharmacy benefit manager (which simply tells a pharmacy whether your health plan covers your prescription or not) to gain customers over other pharmacies.  The letter notes how recent investigations by the FTC and 24 Attorneys General highlight a number of unfair practices designed to switch consumers to CVS pharmacies.

For instance, CVS-Caremark has allegedly charged consumers higher co-payments at  non-CVS pharmacies.  Also, by listing the  organization’s full name “CVS Caremark” on the benefits card provided to beneficiaries of the health plans Caremark serves, some consumers have been deceived into thinking that they can only fill their  prescriptions at  CVS pharmacies. Perhaps the most shocking conduct is the alleged practice of the pbm Caremark providing confidential consumer information to their CVS pharmacy operations, which allows the pharmacists “to solicit non-CVS customers by phone and mail in order to direct them to fill their prescriptions at CVS stores.”

The FTC has been investigating the anti-competitive practices of CVS-Caremark since 2009, and may decide soon how to address these alleged violations of anti-trust and consumer protection laws. The letter urged FTC to order the merger to be undone, and force CVS to sell its pbm business.  If the FTC decides against ordering the break-up of the CVS – Caremark entity, the letter asks FTC to require strong “nondiscrimination” protections for “consumers and pharmacies from programs … which force consumers to use either Caremark-owned mail order or CVS-owned retail pharmacies and ultimately lead to higher prices for consumers.”  The letter also asks FTC to appoint an “independent trustee” to monitor a “stringent firewall between CVS and Caremark” to “protect the confidential information of patients….”

For more info on some lawsuits by pharmacies and consumers concerning these unfair or anti-competitive practices, see Pharmalot’s blog here.

And to learn more about CVS-Caremarks practices that drive up their health plan customer’s costs, visit Change-to-Win’s Alarmed About CVS Caremark website.

Here is a blog from our partners at PostScript chronicling  the ground-breaking work by FDA under Dr. Joshua Sharfstein, the departing Deputy Commissioner who lead the agency’s work on regulation of prescription drugs and devices.  Since early 2009, Sharfstein has worked with FDA Commissioner Margaret Hamburg to lead the agency in assuming a more vigilant role on deceptive advertising to consumers and illegal promotions to practitioners, drug safety (here, here) and the agency’s overall transparency to industry and the public.

Many of these pro-consumer reforms at FDA are complete, while others are still underway. The overall impact, eloquently described by experienced analyst Ira Loss in a recent interview by Pharmalot, was that “ Sharfstein and Hamburg brought a public health mindset to the FDA, which was sadly lacking in the previous administration.” 

We wish Dr. Sharfstein the best of luck in his new work as the top public health official for the state of Maryland, and we hope that Commissioner Hamburg and Scharfstein’s successor are up to the challenge of keeping FDA on course as we enter what could be potentially troubled waters under the new Congress. 

The Sharfstein Years

Posted on: January 12, 2011; 11:30 am

As you’ve heard by now, FDA Deputy Commissioner Dr. Joshua Sharfstein is leaving his post at the FDA to become secretary of health and mental hygiene for Maryland. The blogosphere’s abuzz over what Sharfstein’s move means for the FDA and industry at the top of a new Congress, but amidst the speculation, we wanted to take a minute to review some of what Sharfstein did on the drug side of things during his two years at the agency. From an admittedly long and uncountable list, he:

–Oversaw an increase in the number of domestic and foreign inspectors

–Moved to collaborate with industry and lawmakers on improving supply chain security and oversight

–Launched the FDA transparency initiative, a three-phase process to lift the shroud of bureaucracy a bit (more on that soon)

–Engaged the agency in developing social media guidelines for drug and device makers (we await a final guidance).

In fact, Sharfstein was making waves at the FDA prior to being named deputy commissioner. As health commissioner in Baltimore, he and a group of fellow pediatricians filed a citizen petition in 2007 asking the FDA to reconsider the approval of over-the-counter cough and cold meds for small children, citing years of morbidity data and a lack of studies that showed the drugs to be safe or effective. The high-profile case led to manufacturers pulling under-2s’ cough and cold meds off the shelf–a move that was linked in Pediatrics last month in to a drop in related emergency room visits. (To date, we await the FDA’s final ruling on those products.)

In his post as deputy commissioner, Sharfstein was often the voice of the agency’s drug authority, and at a series of Congressional hearings on drug safety bills, heparin, and the J&J recalls, it was a guiding one. He came to the witness stand informed, open, willing to ask for things that the agency needed. As a physician, Sharfstein had the clinical experience and credibility to sign off on advisory committees’ important–and often contentious–approval and post-market debates. As a former Hill staffer, Sharfstein knew what could be done legislatively and how, and Members in turn offered bills that would give the agency authorities and resources that Sharfstein saw were needed.

And as a public health expert, Sharfstein helped recalibrate and rearticulate the agency’s mission in terms of protecting the public health through prevention, transparency, and collaboration. As Mark Senak at Eye on the FDA put it, Sharfstein’s and Commissioner Hamburg’s appointment signaled “that the agency was effectively turning a corner – that public health was the driving force and if you wanted to communicate effectively with the agency, framing a discussion–whether a drug approval or safety considerations or a policy decision – should be in public health vernacular.”

As a new Congress takes over the gavels, the clamor for faster approvals is growing, and several Members of Congress have suggested they intend to do some bureaucracy-busting on the historically beleaguered FDA. We hope that amidst these changes the agency can and will continue to focus on public health the way Sharfstein has, and carry out current initiatives and address new challenges in that spirit.

–Kate Petersen, PostScript blogger

Today’s Pharmalot had a great interview with Jon Liebowitz, the Chairman of the FTC, on the problem of pay-for-delay settlements that prevent consumer access to generic versions of Provigil, Androgel, and Cipro. With  more and more consumers telling PAL about their challenges paying for rising costs of prescription drugs, reforms to ban this collusive practice  are more important than ever. 

Here’s the Pharmalot interview :

In recent months, FTC commish Jon Liebowitz has resembled Don Quixote as he implored Congress to restrict pay-to-delay deals. The FTC views these patent settlements as anti-competitive, arguing they rob consumers of lower-cost meds that might otherwise arrive much sooner in pharmacies. In response, the US Senate Appropriations Committee voted to include a provision placing limits on such deals, but several Republican senators are voicing opposition (see here and here). Meanwhile, a federal court upheld the legality of the settlements, although one dissenting judge wrote that the practice should be reivewed by the US Supreme Court (back story), a suggestion that Liebowitz hopes will validate his view. We spoke with him about his quest and the odds for success…

Pharmalot: Why have you made pay-for-delay your cause?
Liebowitz: We actually have a number of issues that are enormously important at this agency, ranging from predatory lending to privacy to trying to police the high-tech marketplace. There was a major case against Intel, for instance. But yes, this is really important. It’s supposed to be about the greatest good for the greatest number of people. And that’s $3.5 billion in higher costs to consumers. I think that’s pretty meaningful. That’s why the entire commission, not just me, is interested. And that’s goes back to the last commission, which escalated the issue. It’s one of the most corrupt practices in health care.

Pharmalot: Yet, you haven’t had much luck. A recent federal appeals court upheld the practice and Republicans are threatening to block legislation. It seems you’re tilting at windmiYour odds don’t seem so good.
Leibowitz: We’ve had a two-pronged approach. One is to get a case to the Supreme Court and that’s the litigation prong. And the other is the legislative prong that would restrict these deals. And it’s pretty modest legislation. What are the chances (either will work)? We’ve made steady progress, although sometimes it’s two steps forward and one step back. But there was no legislation in 2006 or late 2005 and, on a bipartisan basis, (legislation we want) has passed the House twice. It’s (recently) passed the Senate Judiciary Committee with bi-partisan support and it’s in the appropriations bill with bipartisan support. So I think our chances are pretty darned good…

To read more about whether Chairman Leibowitz thinks the Supreme Court will take up this issue, or why he sees flaws in industry-backed studies that question the future savings from banning these pay-for-delay settlements, see the rest of the interview on the Pharmalot blog here . . .   

To find out more about pay-for-delay settlements, go to the PAL website here.

Second Circuit takes a pass on reviewing the legality of pay-for-delay settlements

A negative court decision before the Second Circuit this week underscores the importance of passing federal legislation to ban ‘pay-for-delay’ settlements in order to preserve access to affordable, quality prescription drug benefits. At issue is the drug industry practice of paying off generic competitors of expensive brand-name drugs to delay access to low-cost generics. See our earlier blogs here and here.

On Tuesday, the Second Circuit issued a decision on the legality of pay-for-delay settlements concerning the drug Cipro that dealt a blow to consumer advocates and consumer protection attorneys challenging these collusive agreements in court. The decision rebuffed the Federal Trade Commission, the Department of Justice, and a group of State Attorneys-General, all of whom asked the Court to re-evaluate an earlier precedent from 2005 that allowed such ‘pay-for-delay’ settlements.

While the attorneys ponder whether to appeal the case to the Supreme Court, the importance of a legislative solution to this problem becomes even more clear.

Current legislation before the U.S. Senate proposed by Senators Herb Kohl (D-WI) and Richard Durbin (D-IL) would create a presumption that any drug patent settlement that exchanges a payment in return for an agreement to delay bringing a generic to the market is a violation of anti-trust law. The bill gives the FTC the tools to challenge such settlements. However, it still allows the drug companies to prove that a settlement is not a collusive agreement, but a legitimate effort to avoid the time and costs of litigation.

Why is a ban on pay-for-delay settlements important? Since 2005, Congress has responded to concerns about potential collusion by requiring the drug industry to file any settlement of patent litigation concerning a generic drug under seal with the FTC. Since 2004, the FTC has reviewed these settlements, and found that an increasing number of ‘pay-for-delay’ sweetheart deals have been made since the courts started to allow them in 2005. Last fiscal year, a record 19 such pay-for-delay deals were made. By the nine month mark of this fiscal year on June 30, the record was broken, with 21 new pay-for-delay settlements.

These settlements have prevented billions of dollars in possible savings, by preventing generic drugs from being available. At a time when consumer advocacy groups like AARP are documenting exhorbitant price increases for brand-name drugs, generic drugs are the best solution. Another recent report found that every 2% increase in generic use saves Medicaid $1 billion a year.

The FTC, which reviews these agreements, reported in January 2010 that $20 billion dollars in annual brand-name drug spending was being insulated from generic competition by pay-for-delay sweetheart deals. Then, in July, the FTC reported that new pay-for-delay deals were shielding another $9 billion in drug spending from market competition.

How does this impact consumers? The FTC reports that pay-for-delay settlements keep a generic drug off the market for an average of 17 months. The FTC estimates that being forced to take a brand-name drug costing $300 per month, instead of a generic costing $30, would increase a consumer’s health cost by $4,590 over that 17-month period. Drugs that cost more, or that have longer delays, will cost even more.

If a robust, competitive market is to play a role in our new health care system, shielding nearly ten percent of all annual brand-name drug sales from market competition will only allow drug company price increases to continue depleting more and more of our health care resources, while putting more patient care at risk.

In a brief filed with the court, the AMA and AARP described having access to a generic drug improves the quality of patient care:

The price of a brand drug can be prohibitive for uninsured patients who do not have help covering the cost of their prescription drugs. Even for those patients who are insured but who are on fixed or limited incomes, having a generic option is often the difference between having access to a health care treatment and not having any treatment option at all.

And the lawsuit filed by PAL member AFSCME District Council 37in 2006 is challenging the pay-for-delay settlements concerning the drug Provigil, used to treat narcolepsy. This lawsuit has revealed how the lack of competition reduces patients’ quality of life or quality of care when an insurance company refuses to pay for a high-cost brand-name drug. A pastor from Ohio reports that after

paying almost $17,000 in annual premiums for my family [health insurance plan, l] ast year, I was paying around $650/month [for Provigil. I]t now costs me $852/month. That is out of pocket money I have to come up with until later in the year when I reach my deductable and I can enjoy a few months of only paying $60/month. I cannot describe to you how much stress and difficulty this has caused for me and my family the last several years. As you can imagine, with my income, I often cannot afford to refill my prescription. I often take 1/2 or 3/4 of my dosage on days I know I won’t be driving much so I can delay getting a refill. But I do a lot of driving for my work, so I am forced to spend lots of money I don’t have just so I can be safe driving.

To find out how you can support legislation to prevent these pay-for-delay settlements, please contact us!

The last year has been a roller coaster-ride of both successes and set-backs in the fight to eliminate pay-for delay settlements. These multi-million dollar sweetheart deals have been used more and more by brand-named drug makers to get their generic competitors to agree to delay bringing affordable generics to the market.

A bill to ban these agreements was included in the House’s health care reform proposal last fall, and a similar measure was supported by the White House and considered by the Senate. Unfortunately, the Senate’s procedural and jurisdictional rules kept the measure from being included in the national health reform bill enacted in March.

Undeterred, leaders in the House then included the measure in an appropriations bill approved on July 1^st. But the Senate passed one appropriations bill on July 22 without the provision. In the aftermath of this setback, consumer champion Senator Herb Kohl (D-WI) and others succeeded in including this vital reform as an amendment to the FTC’s budget authorization. Kohl and others then  overcame the next major hurdle yesterday, narrowly stopping  drug industry lobbyist efforts to strip the measure in the Senate Appropriations Committee.

Yesterday’s vote was a dramatic one.  Senator Arlen Specter (D-PA) introduced an amendment to remove the pay-for-delay provision from the Committee bill. When four Democrats voted with Specter  to strip away the pay-for-delay provision, the AP reports that:

“Drug company lobbyists in the audience thought they had the vote won, provided they could win over every panel Republican. But Sen. Richard Shelby, R-Ala., voted against the drug companies, helping give Kohl and Durbin [the author of the Appropriations Bill] a surprise win.”

Recent settlements shielding $9 Billion in drug spending from generic competition

The Federal Trade Commission (FTC), which has consistently challenged these anti-competitive agreements in the courts and through testimonies before Congress, called yesterday’s vote a significant victory. FTC chairman Jon Leibowitz testified before Congress earlier this week that these types of pay-for-delay agreements, which delay the entry of generic drugs, are becoming more common (see graph). Legal decisions permitting these agreements have led to their proliferation from none in 2004 to a former high of 19 such agreements in 2009. The FTC notes that in just the first 9 months, the number of pay-for-delay settlements in fiscal year 2010 has already topped last year’s record high.

Graph: Federal Trade Commission

The FTC’s preliminary analysis of the agreement filed this fiscal year concludes that 21 pay-for-delay agreements entered into this year are protecting $9 billion in prescription drug sales from generic competition. Combined with the earlier agreements in effect, this could mean that as much as $29 billion in annual spending on drugs are improperly shielded from generic challengers.  That is a significant loss of possible savings.  The FTC estimates (conservatively, in our opinion) that these settlements are costing consumers and our health system at least $3.5 billion a year.

FTC has continued to raise the alarm about these settlements, and their effect upon consumers. In a press release coinciding with testimony before Congress, FTC Chairman Jon Leibowitz summed it up:

“That’s almost an epidemic,” Chairman Leibowitz said, “and left untreated, these types of settlements will continue to insulate more and more drugs from competition. Every single FTC Commissioner, going back through the Bush and Clinton administrations, has supported stopping these unconscionable agreements.”

On the legal front, PAL continues to support efforts to do away will these settlements. PAL and AFSCME District Council 37 filed an amicus brief in May in support of the Second Circuit’s reconsideration of the legality of these agreements in the Cipro litigation. And the PAL-member lawsuit challenging the pay-for-delay settlements concerning Provigil continues.

FTC Chairman Leibowitz testified that some of these recent events, such as the Second Circuits Cipro decision and the fact that the House has already passed a ban on these settlements, gives him “reason to believe that the tide may be turning, both in the courts and in Congress.” Yet, Chairman Leibowitz wisely cautioned that bringing about such a reform through the Courts will take time, which means that  “legislation would be the most effective way to stop these deals.”

Thus the successful Senate Committee vote yesterday “means that consumers are one step closer to saving billions on their prescription drugs” according to Leibowitz.  And help can’t come too soon.  The bill’s Senate sponsor, Senator Herb Kohl, points out why:

“The cost of brand-named drugs rose nearly ten percent last year. In contrast, the cost of generic drugs fell by nearly ten percent. At this time of spiraling health care costs, we cannot turn a blind eye to these anticompetitive backroom deals that deny consumers access to affordable generic drugs.”

We view yesterday’s decision as a crucial step  to put legislation in place to end these agreements and foster consumer access to affordable generic drugs.