TAKE ACTION FOR LOWER DRUG COSTS! HELP SPREAD THE WORD

Consumer Catalyst has launched a social media campaign to raise awareness about how sketchy ‘Pay-for-Delay’ deals hurt consumer health! Join the discussion on twitter and share your story, using the hashtag:

Stop the #RxRacket!

Pharmaceutical companies are colluding to keep drug prices high – and taking that money right out of your pocket.

Did you know drug companies have made more than 160 secret, back-room deals that

• Have kept 100 generic drugs or more off the market for years
• Drive up the cost of each drug by an average of $3,000 a year
• Keep all of our prescription costs high, while divvying up the spoils!

Right now, the Supreme Court is currently deliberating over whether these back-room deals are legal – but we know they’re wrong. Since 2005, as many as 142 different generic drugs have been unfairly kept from consumers, according to government reports. Delaying the launch of a generic drug lets the drug companies make bigger and bigger profits, while patients are stuck footing the bill, or going without the medicines they need.

The Supreme Court heard arguments by the drug companies, and fortunately Justices Kagan and Sotomayor raised consumer concerns – but the Court did not hear the perspective of the thousands of Americans unable to afford their medications. That’s because most people don’t even know that these deals are costing consumers thousands, and our health system billions of extra dollars, each year!

Help us raise awareness of this #RxRacket. The public deserves to know how this decision will affect us all – how thousands of Americans are being forced to choose between skipping their medications or going into credit card debt, just so that drug companies can make even more profit. Not to mention, how health care costs for everyone have gone up, because insurers pay most of these higher costs!

Whatever the Supreme Court decides, help spread the word, so we can help make sure that these deals come to an end, once and for all.

Target drugs: 
If you have taken Cipro, Provigil, or Androgel, you have definitely paid more because of a pay-for-delay settlement. And according to legal experts, it is very probable that many drugs including blockbuster drugs like Lipitor, Plavix and Nexium — have been delayed by pay-for-delay deals.*

We need you to tell everyone you know that this is happening, and help gather and share the stories of people you know that have been negatively impacted.

What you can do:

1. Read the stories shared by two women, Tanna and Karen, who were unable to afford their medications due to pay-for-delay deals that kept generic Provigil off the market for six years. Also, read how the companies’ legal arguments make no sense.
2. Share these posts on Twitter, using the hashtag #RxRacket, and ask others to share their stories too. And follow us at @postscriptrx.
3. Join our community on Facebook to keep up with the campaign and join our email list of impacted consumers by sharing your story.

You can find all the information you would ever need about this issue on our Pay-for-Delay info page. Please also feel free to add your thoughts on this #RxRacket in the comments, below.

Thank you for helping us protect your right to affordable medicine!

*The Full List – Drugs Likely to Have High Prices from ‘Pay-for-Delay’ Deals:
Adderall XR, Aggrenox, Altace, Arthrotec, Caduet, Carbatrol, Clarinex, Comtan, Duac, Effexor XR, Eloxatin, Ethyol, Femcon Fe, Fentora, Flomax, Lipitor, Lamictal, Levaquin, Lexapro, Loestrin-24 Fe, Loprox, Lotrel, Lybrel, Namenda, Naprelan, Nexium, Niaspan, Niravam, Olux, Opana ER, Ortho Tri Cyclen Lo, Oxytrol, Plavix, Propecia, Razadyne, Razadyne ER, Rythmol SR, Sinemet CR, Skelaxin, Solodyn, Stalevo, Tricor 145mg, Vanos, Vfend, Wellbutrin XL (150 mg), Xopenex, and Zantac!

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

A surprising decision in the Second Circuit has breathed new life into legal efforts to prevent drug makers from paying to keep generics off the market.

Since 2005, the drug industry has increasingly used multi-million dollar ‘pay-for-delay’ settlements to prevent generic drugs from coming to the market. The PAL coalition has opposed this industry collusion with lawsuits on Provigil, Tamoxifen, and Cipro, and through our support for legislation (introduced by Rep. Rush and Sen. Kohl). The FTC has also been a steadfast opponent of these anti-competitive agreements and their negative impacts on consumers. Unfortunately, the ability of FTC or PAL members to challenge these settlements in the courts has been hampered by a number of unfavorable legal decisions.

The Second Circuit’s Cipro Decision

The Second Circuit’s April 29th ruling did dismiss the challenge to the ‘pay-for-delay’ settlements totaling $398 million that have prevented a generic version of Cipro from coming to the market. But the Court did so begrudgingly, and then invited the folks bringing the lawsuit to ask the Second Circuit to revisit the question of whether these settlements are legal under anti-trust protections. Even more surprising, the Court then spelled out why. 

In their decision, the three judge panel stated that a review of the binding precedent established under Tamoxifen by the full nine-judge panel for the Second Circuit (called an ‘en banc review’) may be appropriate for four reasons: First, the Court said that United States Department of Justice has urged a review of this decision saying that “Tamoxifen adopted an improper standard that fails to subject reverse exclusionary payment settlements to appropriate antitrust scrutiny.” Second, the Court found that “there is evidence that the practice of entering into reverse exclusionary payment settlements has increased since we decided Tamoxifen.” Third, the panel stated that “after Tamoxifenwas decided, a principal drafter of the Hatch-Waxman Act criticized the settlement practice at issue.” Finally, the Court noted that the Tamoxifen decision was based in no small part on the now erroneous understanding that a pay-for-delay settlement with the first generic competitor would not prevent other generic competitors from attempting to followand file suit.

The 2005 Tamoxifen decision by the Second Circuit Court of Appeals (which covers New York, Vermont, Connecticut) dismissed an FTC order challenging a pay-for-delay settlement. The Tamoxifen Court ruled the practice legal under anti-trust law, because the settlement provided drug maker AstraZeneca with no more protection from generic competition than their patent already did.

This Tamoxifen decision, along with the Eleventh Circuit’s Schering-Plough decision in 2005, and Federal Circuit’s 2008 Cipro decision, have been mounting obstacles to consumer and FTC efforts to oppose these settlements. Only the Sixth Circuit, in its 2002 Cardizem decision, has held that such agreements to “eliminate competition” are a “per se illegal restraint on trade.”

When the Appeals Courts from different US Circuits arrive at differing legal standards, the US Supreme Court should resolve this inconsistency, or ‘split’ between the Courts. Indeed, the PAL-member lawsuits concerning Cipro and Tamoxifen asked the Supreme Court to do just that, as has the FTC. So far, all of these requests have been denied. But a possible reversal in the Second Circuit might change things.

Consumers, legal and medical experts, and the Administration all file briefs in opposition to continued legality of pay-for-delay settlements

Amicus briefs in support of the request for a reconsideration of the Tamoxifen standard were filed by PAL and PAL coalition member AFSCME DC37; AARP, AMA, and the Public Patent Foundation; Consumers Union, US Pirg, Consumer Federation of America, and the National Legislative Associaton on Prescription Drug Prices. Also filing briefs were the American Antitrust Institute, the FTC, and the Department of Justice’s Anti-Trust division.

The amicus brief for the Department of Justice argues that ”by shielding most private reverse settlement agreements from antitrust liability, the Tamoxifen standard improperly undermines the balance Congress struck in the Patent Act between the public interest in encouraging innovation and the public interest in competition.”

The amicus brief from the Federal Trade Commission (FTC) added three additional reasons to those stated by the Second Circuit panel. FTC argued that the Tamoxifen standard gives drug companies an improper incentive to pay off generic drug manufacturers and protect even the weakest patents.

Next, FTC noted that the number of pay-for-delay settlements had grown since 2005, to now insulate “at least $20 billion in sales of branded drugs from generic competition.”

The FTC estimates (very conservatively in our opinion) that these settlements will continue to cost $3.5 billion a year by delaying competition from lower-priced generics, but warned that these costs may grow.

 The amicus brief submitted by PAL and PAL member AFSCME District Council 37pointed out that these settlements have cost consumers and health plans $12 billion or more each year in lost savings on generic drugs, and the costs are likely to increase as brand-name drug prices go up (as they did by 9.2 % in the year ending on March 31, 2010) while generic drug prices decline (as they did by 9.7 % during this time period.) Aside from the effect that higher costs have on reducing access to needed medicines, PAL pointed out how these settlements threaten to reduce the quality of care for consumers by limiting the drug options available to them. PAL pointed out that consumers of the drug Provigil, which is protected from generic competition by a pay-for-delay settlement, end up entering the donut hole faster and paying huge sums out of pocket when their health plans refuse to cover the drug due to its high cost.

AARP, the AMA, and the Public Patent Foundation filed a brief arguing that these settlements threaten our health care system because they undermine consumer access to generic drugs, which have, on the whole, “saved consumers over $734 billion in the last 10 years.” AARP noted that “[e]ven 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 health care treatment and not having any treatment option at all.”

AARP’s brief warned that the Tamoxifen precedent will have long-term negative consequences on the well being of consumers because “when a generic pharmaceutical’s entry into the market is delayed, it limits treatment access to vulnerable patient populations and prolongs the difficulty that physicians have in prescribing affordable treatment options.”

An amicus brief filed by Consumers Union, Consumer Federation of America, U.S. PIRG and National Legislative Association of Prescription Drug Prices pointed out that the Tamoxifen decision allows the pay-for-delay settlements that “prevents patent challenges” which is contrary to the purpose of the Hatch-Waxman Act to “encourage[] patent challenges…..”

The American Antitrust Institute filed an amicus brief highlighting the anticompetitive nature of these settlements, and the Attorney Generals from 34 States filed an amicus noting that “the Cipro case is also of exceptional importance because the United States Supreme Court has refused to review the split between the Sixth and Eleventh Circuits.”

Industry use of these pay-for-delay settlements has driven up costs and prevented access to needed medicines for millions of consumers. This industry practice has prevented or delayed generic versions of the drugs Cipro, Provigil, Androgel, and many other drugs that amount to $20 billion of our nation’s current $278 billion in drug spending, according to the FTC.

PAL, Community Catalyst, and dozens of PAL coalition members have opposed these settlements through lawsuits and legislative advocacy. Please contact us if you would like to join in our work to oppose these anti-competitive settlements.

 — by Emily Cutrell and Wells Wilkinson

Members of Prescirption Access Litigation’s coalition are plaintiffs in a national class action lawsuit that alleges the Cephalon (Nasdaq:CEPH) illegally took steps to keep a less expensive generic version of its narcolepsy drug Provigil off the market, including paying off generic drug companies that challenged Cephalon’s patents on Provigil to not try to bring a generic to market. So we follow news about Provigil quite closely.

Back in September, we wondered aloud “Why did Cephalon close its Provigil Patient Assistance Program.” We speculated:

Cephalon jacked up the price of Provigil 14% back in March [2008], according to a Bloomberg News report. US sales of Provigil for the first half of the year were $417 million. Given that Provigil’s total 2007 sales were $744 million, the drug’s sales are growing….

Provigil is clearly a money maker for Cephalon, approaching the magic $1 billion “blockbuster” market. Provigil has on the one hand deprived consumers of a more affordable generic and on the other hand told uninsured patients seeking assistance that they’re out of luck halfway through the year….

One can’t help but wonder if the Patient Assistance Program’s closure has anything to do with the anticipated introduction next year of Nuvigil, a “successor drug” to Provigil. Nuvigil (armodafinil) is the “single isomer” formulation of Provigil (modafinil), which means that Nuvigil is just one half of the molecule that gives Provigil its kick.

The Wall Street Journal reported this week in How a Drug Maker Tries to Outwit Generics:

Twice this year, Cephalon Inc. has sharply raised the price of its narcolepsy drug Provigil. The drug is now 28% more expensive than it was in March and 74% more expensive than four years ago…The Frazer, Pa., company has said in investor presentations that it plans to continue to raise the price.

The Provigil price increases — the drug’s average wholesale price is now $8.71 a tablet — are an extreme example of a common tactic pharmaceutical companies employ in the U.S. to boost profits and steer patients away from cheaper generics.

It works like this: Knowing that Provigil will face generic competition in 2012 as its patent nears expiration, Cephalon is planning to launch a longer-acting version of the drug called Nuvigil next year. To convert patients from Provigil to Nuvigil, Cephalon has suggested in investor presentations it will price Nuvigil lower than the sharply increased price of Provigil.

By the time copycat versions of Provigil hit the market the company is banking that most Provigil users will have switched to the less-expensive Nuvigil, which is patent-protected until 2023. In the meantime, Cephalon will have maximized its Provigil revenue with the repeated price hikes.

“You should expect that we will likely raise Provigil prices to try to create an incentive for the reimbursers to preferentially move to Nuvigil,” Chip Merritt, Cephalon’s vice president of investor relations, told a Sept. 5 health-care conference, according to a transcript of the meeting.

A more cynical statement by a pharmaceutical spokesperson is hard to find, and that’s saying a lot. What this statement means is that Cephalon is apparently willing to force patients to pay more — for no reason other than to boost sales of its new drug, Nuvigil, and get patients and physicians to switch to it – all before a generic version of Provigil hits the market, which likely will cost 70-80% less than Provigil within a year of a generic being available.

Increasing drug prices, of course, are apparently par for the course in the U.S. But, as the WSJ points out, “Provigil’s price increase over the past four years has been almost four times steeper than the 4% compound annual growth rate of the average drug price during that period, according to a DestinationRx analysis of 2,570 brand-name drugs.”

We at PAL hear from patients on a daily basis who cannot afford Provigil. These include people who are uninsured, people who are in the Medicare Part D “donut hole,” people who have qualified for Social Security Disability Income (SSDI) but who are stuck in the ridiculous 2 year waiting period to get on Medicare, and people whose insurance won’t pay for Provigil.

For many of these people, they need Provigil in order to have functioning daily lives — we’re not talking about, as the WSJ describes, people take Provigil for uses not approved by the FDA, “as a ‘lifestyle drug’ to help them stay awake during work or leisure activities.” We’re talking about people like Jessica, who described her inability to afford Provigil in Jessica’s story: No help from Cephalon for cost of Provigil.

Making payoffs to keep generic Provigil off the market, raising its price at a rate four times higher than other drugs, closing its patient assistance program halfway through the year — all we can say is shame on Cephalon.

(Got a Provigil story to tell? Post a comment below.)

A reader of this blog recently wrote to us here at Prescription Access Litigation and reported that the Cephalon (Nasdaq:CEPH) had closed its Patient Assistance Program for Provigil, its prescription drug for Narcolepsy and other sleep disorders.

Why would Cephalon deprive uninsured and low-income patients access to this drug?

For many patients, this adds insult to injury. Back in March, we posted Jessica’s story: No help from Cephalon for cost of Provigil, a heartbreaking story of a young woman with narcolepsy whose insurance dropped Provigil from its formulary. As Jessica described in that entry:

When my health insurance dropped Provigil from their formulary in 2007, my Provigil copay jumped from $50/month to $234/month in addition to a $500 brand name deductible and my $130 monthly premium…Desperate to find a way to get my medicine so I wouldn’t end up on welfare, I called Cephalon’s PROVIGIL Assistance Program and requested financial assistance. I was still willing to pay part of the costs, but I hoped they could give me some sort of rebate. Cephalon told me that because I had some form of insurance I didn’t qualify for any assistance, regardless of how high my co-payment is or my financial situation.

They told me that if I was uninsured they would pay up to $500 per month (which is the retail cost of a month supply for me). They actually suggested I drop my insurance plan. It seems strange (not to mention unethical) that they would rather I drop my insurance so they could give me $500/month instead of just helping me with a portion of my $234 co-pay…

I actually considered listening to them and dropping my insurance so I could get free medication, but that ultimately wasn’t an option because I have other health conditions and my pre-existing conditions would make it unlikely I could obtain new insurance in the future.

So Cephalon had some pretty stringent limitations in place to begin with on its Patient Assistance Program: If a patient had any insurance, even if that insurance wouldn’t cover Provigil at all, Cephalon wouldn’t help them. We heard from quite a few patients after we posted Jessica’s story who described being in the same situation. And then recently a reader alerted us to the fact that Cephalon had closed its Provigil assistance program for the rest of the year. Apparently, they closed it quite some time ago – the Brass and Ivory blog posted a link to Jessica’s story, and a commenter there reported back in June that the program was “full.” We called the Provigil assistance line and they confirmed that the program is indeed closed for the rest of the year.

Now, some may argue that Cephalon is not required to provide free drugs to anyone, and that it’s up to them to determine how much help to provide. While that’s true, it’s not the full picture. Cephalon has taken numerous active steps to deprive patients of affordable Provigil. For instance they’ve kept a more affordable generic version of Provigil off the market.

Cephalon filed patent infringement lawsuits against generic drug companies that tried to bring a less expensive generic version to market. Then Cephalon paid them off, to the tune of more than $130 million, not to sell generic versions of Provigil until 2011 at the earliest. PAL member AFSCME District Council 37 Health & Security Plan is a plaintiff in a national class action lawsuit challenging these payoffs.

And Cephalon jacked up the price of Provigil 14% back in March, according to a Bloomberg News report. US sales of Provigil for the first half of the year were $417 million. Given that Provigil’s total 2007 sales were $744 million, the drug’s sales are growing. (But apparently not enough for Cephalon, which just ended its Provigil co-promotion agreement with Takeda Pharmaceuticals North America, because sales didn’t reach an agreed-upon level) And as we reported back in March:

Cephalon’s CEO, Frank Baldino, got $13.5 million in compensation last year. This is much more than CEOs at other, much larger, drug companies earned last year, including Pfizer and Bristol Myers Squibb.

Provigil is clearly a money maker for Cephalon, approaching the magic $1 billion “blockbuster” market. Provigil has one the one hand deprived consumers of a more affordable generic and on the other hand told uninsured patients seeking assistance that they’re out of luck halfway through the year. (Note: Cephalon only said that the program is closed to new patients – it’s not clear whether patients who got on the program before it closed are helped through the year, or whether their help was cut off as well)

One can’t help but wonder if the Patient Assistance Program’s closure has anything to do with the anticipated introduction next year of Nuvigil, a “successor drug” to Provigil. Nuvigil (armodafinil) is the “single isomer” formulation of Provigil (modafinil), which means that Nuvigil is just one half of the molecule that gives Provigil its kick.

Introducing these single-isomer versions of drugs is a common tactic used by drug companies when they are facing generic competition: chop off one-half of the molecule, and aggressively market it as a “new” drug, regardless of whether it’s more effective or not. This is what Astra-Zeneca did when Prilosec’s patent was set to expire — Nexium is the single-isomer version of Prilosec. But it’s no more effective — just much more expensive. Cephalon’s timing is early, since the deals it cut with generic drug makers will keep a generic version of Provigil off the market until 2012. But when Cephalon submitted its application to the FDA for approval of Nuvigil, it was likely not clear how soon a generic Provigil would come on the market.

And the market for drugs like Provigil and Nuvigil is growing — although just approved for conditions like Narcolepsy, obstructive sleep apnea and shift-work sleep disorder, they’re being widely used “off label” for other purposes — such as by people who want to stay awake and increase their productivity over long hours. The San Jose Mercury News ran a story this week, “Pill that boosts productivity gaining favor in Silicon Valley”. Some choice snippets from that article:

The practice appears to have gotten at least a foothold in Silicon Valley, especially with Provigil…Provigil seems to be gaining favor among workers here, according to TechCrunch founder and influential Internet commentator Michael Arrington. In a blog posting titled “How many Silicon Valley startup executives are hopped up on Provigil?” Arrington declared in July that “I’ve spoken with one executive who says he uses it regularly to work 20-hour days, and the buzz lately is that it’s the ‘entrepreneur’s drug of choice’ around Silicon Valley.”

It’s not clear whether Cephalon is claiming that Nuvigil is an improvement over Provigil. Nuvigil’s FDA approved label’s only reference to this just says that Nuvigil is the “longer-lived enantiomer
of modafinil.” Single-isomer formulations are seldom significant improvements over the whole molecule, but are virtually always much more expensive and heavily promoted as though they are the next new wonder drug. It’s not uncommon for companies to begin winding down the marketing efforts behind an old drug when a new drug is on the horizon.

The press release that Cephalon issued back in June 2007, when FDA approved Nuvigil, gives some insight into where they intend to take this drug, and how they might be looking to expand the market for it:

Cephalon’s clinical program will evaluate the use of NUVIGIL as a treatment for serious medical conditions such as bipolar depression, cognition associated with schizophrenia, excessive sleepiness in medical conditions such as Parkinson’s disease, and fatigue in patients who are being treated for cancer. The company currently plans a commercial launch of NUVIGIL once additional clinical data has been amassed.

“The approval of NUVIGIL allows us to preserve our current leadership position in the area of wakefulness,” said Frank Baldino, Jr., Ph.D., Chairman and CEO, Cephalon. “More importantly, we now have a longer-term opportunity to further characterize the utility of this compound beyond wakefulness.” NUVIGIL is protected by a U.S. patent expiring in 2023.

One possibility, then, is that Cephalon is winding down its patient assistance program for Provigil in anticipation of a push on Nuvigil. Even though assistance programs typically provide people drugs for free or very cheaply, they can still serve a marketing purpose. Some of those uninsured patients will eventually get insurance or get on a public program like Medicaid or Medicare. If they’re already taking your more expensive and newer drug because they’re on your patient assistance program, then they’re likely to remain on that drug once they have insurance that will actually pay for it, and thus generate revenue for the company. It’s a similar logic to drug samples in the doctor’s office — the cost of the samples is an investment in future prescriptions.

But that’s awfully cynical. Could a company that has paid off generic drug makers to deprive consumers of a more affordable version of a drug that’s a necessity for many people with narcolepsy, that closes its patient assistance program halfway through the year, and that suggests to patients that drop their insurance in order to get on a patient assistance program, be that cynical? Surely not.

We’ve written about in the past on the PAL blog about, Provigil, a prescription drug used to treat narcolepsy and other sleep conditions, which is made by Cephalon (NasdaqGS:CEPH). [See previous posts such as "FTC member speaks out on Provigil generics payoff case," and "Jessica’s story: No help from Cephalon for cost of Provigil"]

Cephalon is alleged to have paid off four generic drug companies to keep more affordable generic versions of Provigil off the market. PAL member AFSCME District Council 37 Health & Security Plan joined a nationwide class action lawsuit in Eastern Pennsylvania against Cephalon and the four generic companies (Teva, Ranbaxy, Barr and Mylan) on behalf of a nationwide class of consumers, health plans and other “third party payors.”

The Federal Trade Commission also sued Cephalon back in February, in the U.S. District Court for the District of Columbia. Yesterday, the Judge hearing that case ordered that the FTC’s case be transferred to the Eastern District of Pennsylvania, where the class action lawsuit is pending.

In ordering the transfer, the Judge in the FTC case primarily relied on the conclusion that having the FTC case and the class action before the same Judge would avoid “inconsistent judgments.” As Judge John D. Bates wrote in his opinion:

The most compelling point in Cephalon’s favor is the risk of inconsistent judgments that would arise if this case is not transferred. Although there are some differences between the private parties’ claims against Cephalon and the government’s case — namely that the private litigants must demonstrate antitrust injury and prove damages — at the core the two matters involve identical issues of fact and law. Hence, absent transfer to the Eastern District of Pennsylvania, Cephalon would be forced simultaneously to litigate two cases in two different courts arising out of precisely the same conduct. That obviously presents a serious risk of inconsistent judgments. If this Court, for instance, were to find that reverse-payment settlements are lawful while the district court in Pennsylvania reached the opposite result, or vice versa, Cephalon would face a classic case of conflicting judgments. That is exactly the sort of inconsistent result that transfer can ameliorate.

The Judge then went on to accuse the FTC of “forum shopping,” and of in fact looking to create inconsistent judgments so as to increase the likelihood that the Supreme Court would accept a case and determine once and for all whether reverse payment settlements violate the antitrust laws. As the Judge wrote:

Indeed, the FTC would likely be content if this case did result in inconsistent judgments. That is because, as Cephalon points out, the Commission is rather openly shopping for a circuit split on the issue of reverse-payment Hatch-Waxman settlements, and all the better if the FTC could potentially arrange for two courts of appeals — the Third and D.C. Circuits — to decide that question in the context of what is essentially the same case. To be sure, the Commission is free to exercise its prosecutorial judgment to pursue a strategy that it believes will ultimately result in Supreme Court review. But it strikes this Court as both odd and unreasonable to do so at the expense of exposing a single defendant (engaged in a single course of conduct) to conflicting judgments in order to advance the agency’s enforcement goals. The danger, and burden, of inconsistent judgments against one defendant based on the same events, in short, outweighs whatever legitimate interest the FTC may have in achieving that result for strategic reasons.

In 2006, the Supreme Court refused to hear an appeal in a case the FTC brought against Schering-Plough, challenging a payoff of a generic drug maker that had sought to bring a generic version of Schering’s K-Dur to market. Similarly, the Supreme Court had also refused to hear an appeal of a class action originally brought in federal court in New York, challenging a generics payoff concerning the prescription drug for breast cancer, Tamoxifen.

These two refusals by the Supreme Court to address the issue of whether a brand-name drug company paying off a generic drug company not to bring a generic to market violates the federal antitrust laws left the question open. Since that time, there has been a resurgence of such payoffs, resulting in consumers being deprived of less expensive generic drugs.

We at Prescription Access Litigation remain committed to challenging such deals and exposing them for the crude, anti-consumer payoffs that they are. It’s unclear what effect the transfer of the FTC’s case to Pennsylvania will have. Stay tuned.

Julie Appleby at USA Today has a story in today’s edition, “Drug costs rise as economy slides”. In it, she says:

People with health insurance are having more trouble paying for prescription drugs as higher out-of-pocket costs for medications and a slowing economy strain family budgets, according to surveys and health care analysts….

“Incomes aren’t going up, but co-payments are,” says Gary Claxton of the Kaiser Family Foundation, which studies health policy.

In some cases, the patient’s share of drug costs is no longer a flat dollar amount, but a proportion that can range from 20% to 70%.

What appears to be happening is that insurers are coming full circle on how they deal with drug costs. Up until the mid-90s, many patients had insurance that had them pay a percentage of the cost of their prescription drugs (often 20%). When “managed care” became the trend (which limited people to seeing only doctors in the insurer’s network, required referrals for specialists and is most famous for health plans denying coverage for various treatments), there was a move to the “fixed copayment.” Back then, most health plans had one fixed copayment for all drugs — brand-name or generic, new or old, expensive or cheap.

Direct-to-Consumer Advertising of prescription drugs took off after the FDA loosened the rules on drug advertising in 1997. Health insurers saw the costs of the drugs taken by their members skyrocket, and sought to discourage the use of expensive newer brand-name drugs, and encourage the use of older, less expensive generic drugs. So health plans moved to the “tiered” copayment, where cheaper generics had one copayment (say $5), the “preferred” brand-name (i.e. often the one that the insurer got the best deal on from the drug company) had another (say $10), and “non-preferred” brand-names had the highest (say $20).

Over time, as drug costs went up, and as promotions to doctors and consumers led many more people to use prescription drugs on a regular basis, copayments crept up too. Gone are the days of the $5 copayment. Many people now have copayments of $10-$15 for generics, $20-$25 for preferred brand-names and $40+ for nonpreferred brand-names. Plus, more people are facing separate and much higher copayments for “specialty” drugs (i.e. drugs to treat serious illnesses like cancers).

There’s also been something of a trend towards “high deductible” health plans, which make consumers responsible for all of their medical costs until a deductible (say $1500) is met. This was supposed to make people more “responsible” about the cost of their health care but can perversely have the opposite effect, by making people delay medical treatment until it’s an emergency, when of course the treatment is far more expensive.

Medicare Part D has resulted in millions of senior citizens now paying for a percentage of the cost of their drugs, rather than fixed copayments. Which means when the cost of their drugs goes up, so do their out of pocket payments.

The end result of this is that it’s no longer just patients without insurance who can’t afford their prescription drugs — more and more people with insurance can’t afford them either. Someone with a chronic illness who takes, say, 8 or 10 drugs everyday can face hundreds of dollars a month just in copayments. And more and more health plans are putting annual maximums on what they’ll pay for prescription drugs. After you hit the maximum, you’re on your own.

Many drug companies have patient assistance programs that can provide free or discounted drugs to people who can’t afford them. But as a recent post on this blog illustrates, many of those drug company programs are closed to people who have insurance — even if they still can’t afford even the copayments on their drugs, or if their health plan doesn’t even cover the drug in question. In Jessica’s story: No help from Cephalon for cost of Provigil, a young patient with Narcolepsy describes how she couldn’t get any help from Cephalon to get the Provigil she needs. She was ineligible for their program because she had insurance.

As long as drug prices continue to rise, and drug companies convince millions of doctors to prescribe and millions of patients to take expensive, newer brand-name drugs instead of equally effective and much less expensive generic drugs, we’re going to see more and more insured patients, not to mention the uninsured, face drug bills they can’t afford.

We recently posted an item discussing a New York Times article about Genentech’s drug Cerezyme . One reader posted a comment on that item, and her story is so compelling that we asked her if we could post it as a stand-alone blog entry. She agreed. Jessica’s story appears below, in which she describes the difficulties she’s faced in affording her prescription for Provigil, which she needs to treat her narcolepsy.

One of the reasons that Provigil is so expensive (about $200 for 30 tablets of 100 mg, and about $270 for 30 tablets of 200 mg) is that there is no generic version available. Why is there no generic version available? Largely because Cephalon (NASDAQ: CEPH), the manufacturer of Provigil, filed patent infringement lawsuits against generic drug companies that tried to bring a less expensive generic version to market. Then Cephalon paid them off, to the tune of more than $130 million, not to sell generic versions of Provigil until 2011 at the earliest. PAL member AFSCME District Council 37 Health & Security Plan is a plaintiff in a national class action lawsuit challenging these payoffs.

Earlier this week, it was reported that Cephalon’s CEO, Frank Baldino, got $13.5 million in compensation last year. This is much more than CEOs at other, much larger, drug companies earned last year, including Pfizer and Bristol Myers Squibb. This news will certainly be of no comfort to patients like Jessica.

Without further ado, here’s Jessica’s story. At her request, we’re using only her first name. The opinions expressed and events described below are hers and not necessarily ours.

Cephalon makes a similar claim as Genentech’s to provide “the drug free, if necessary, so that no one goes without the product because of its cost.” Cephalon’s PROVIGIL Assistance Program is solely administered by the National Organization for Rare Disorders (NORD). The NORD website asserts that their Patient Assistance Programs

“assist uninsured or under-insured individuals in securing life-saving or life-sustaining medications. In addition to the estimated 50 million Americans who have no health insurance, an increasing number of insured individuals have policies that do not reimburse for prescription drugs. Others have policies with low annual caps on prescription drug expenditures. NORD works closely with humanitarian-minded pharmaceutical and biotechnology companies to ensure that certain vital medications are available to those individuals whose income is too high to qualify for Medicaid but too low to pay for their prescribed medications.”

But it turned out Cephalon was not as “humanitarian-minded” as NORD would have you believ

When my health insurance dropped Provigil from their formulary in 2007, my Provigil copay jumped from $50/month to $234/month in addition to a $500 brand name deductible and my $130 monthly premium. I’m not sure why my insurer took Provigil off the formulary (I asked them and they didn’t know either) but I wouldn’t be surprised if it was in response to Cephalon’s prohibiting the generic versions that were supposed to come out in 2006. I realize $234 a month is nothing compared to many HIV and cancer drugs. But $234 is a lot when you consider that my Narcolepsy prevents me from being able to work more than 15 hours/week (with medication) and that I am only 26 and will be dependent on drugs like Provigil for the rest of my life. I was barely scraping by with a $50/month copay so I suddenly found myself unable to front the costs to buy even a one-month supply of Provigil. I had to stop taking my medicine which meant I could no longer work at all.

Desperate to find a way to get my medicine so I wouldn’t end up on welfare, I called Cephalon’s PROVIGIL Assistance Program and requested financial assistance. I was still willing to pay part of the costs, but I hoped they could give me some sort of rebate. Cephalon told me that because I had some form of insurance I didn’t qualify for any assistance, regardless of how high my co-payment is or my financial situation. They told me that if I was uninsured they would pay up to $500 per month (which is the retail cost of a month supply for me). They actually suggested I drop my insurance plan. It seems strange (not to mention unethical) that they would rather I drop my insurance so they could give me $500/month instead of just helping me with a portion of my $235 co-pay. It is cheaper for them if I have insurance. And if they can afford to shell out $500 a month to every uninsured patient, why can’t they just reduce the price for everyone so less people will need their financial assistance in the first place? They would probably make more money if they charged less because patients like me wouldn’t be forced to stop taking the medicine all together.

I actually considered listening to them and dropping my insurance so I could get free medication, but that ultimately wasn’t an option because I have other health conditions and my pre-existing conditions would make it unlikely I could obtain new insurance in the future. I contacted NORD back in December to notify them of the discrepancy between Cephalon’s assistance policies and those implied on NORD’s website. I asked for their help or their clarification if I had misunderstood. 4 months later, I have yet to hear anything from NORD.

My neurologist was kind enough to give me samples which I now ration out for days when I absolutely must function. I can’t afford enough Provigil to work so I have been forced to apply for Social Security Disability Benefits (which I’m told will likely be denied). I’ve tried getting in on clinical trials but I don’t qualify. The thought of spending the rest of my life half-asleep and a burden to the people I love is so depressing I often think I’m better off dead.

Unethical drug companies have managed to take everything I’ve earned in my short 26 years of life and turn it into debt without any hope or means to get back on my feet. I don’t know about Genentech, but Cephalon certainly doesn’t care if their customers go without the product because of its cost. Cephalon has no interest in the well-being of the very consumers that support them.

We’re happy to post a response to this from Cephalon or NORD, if anyone from either of those entities cares to reply.

On February 14, we reported that the Federal Trade Commission is suing Cephalon (NasdaqGS:CEPH) for paying off four generic drug companies not to bring a generic version of its sleepiness drug, Provigil to market. Several of our coalition members have been involved in a class action lawsuit against Cephalon for the same conduct for several years.

Today, Jon Leibowitz, one of the five members of the Federal Trade Commission, has an op-ed in the Washington Post, “This Pill Not To Be Taken With Competition: How Collusion Is Keeping Generic Drugs Off the Shelves” about the suit and its importance. Here are a few excerpts:

Cephalon was entitled to defend its patent in court. Instead, it fought back unfairly. The company paid the competing manufacturers more than $200 million in exchange for their agreements to keep their products off the market for nearly seven years. This payoff benefited the generic manufacturers enormously: They made more by sitting on their hands than they ever could have the old-fashioned way, by entering the market and competing. For Cephalon, too, the payoff was a bargain: Chief executive Frank Baldino Jr. acknowledged that it made about $4 billion “that no one expected.”

Who has to foot the $4 billion bill? Consumers, employers, insurers and the government — who have no choice but to pay the higher price for brand-name Provigil.

So while we are all forced to foot this bill, Cephalon is earning an impressive 2000% return on their “investment” of $200 million in paying off the generics. ($4 billion / $200 million = 2000%). This amply demonstrates that the loopholes the Courts have carved in Hatch-Waxman don’t just invite brand name drug companies to defend even what Leibowitz calls “infirm” patents and to pay off generic companies — they actively encourage such tactics – what pharmaceutical executive could resist a 2000% return on investment? Arguably these so-called “reverse payment settlements” are one of the best investments in pharma — perhaps even better than true research and development.

But this crucial benefit [of generics coming to market earlier] is threatened by a disturbing trend: the emergence of “pay-for-delay” settlements and the willingness of some federal courts to permit such obviously anticompetitive agreements. When these troubling deals first came to light in the late 1990s, the FTC fought them — and stopped them cold. Between 2000 and 2004, no brand and generic companies entered pay-for-delay deals; in other words, companies resolved patent disputes without anticompetitive payoffs.

Unfortunately, that success is under siege. Two federal appeals courts — in rulings that conflict with the analysis of a third appellate court — have found that a brand-name drug company facing a patent challenge is free to pay any amount to keep a generic producer from entering the market until the patent expires. These rulings depart from the spirit of Hatch-Waxman and our nation’s antitrust laws, and they harm consumers by subverting the competition at the heart of our free-market system.

One irony is that in one of these cases, concerning the prescription potassium supplement K-Dur, the Administration’s own Solicitor General sabotaged the Federal Trade Commission’s efforts to get the Supreme Court to review that case and this practice more broadly. (Here‘s the Solicitor General’s brief to the Supreme Court.)

Not surprisingly, after two courts blessed such payoffs, the frequency of these settlements has increased sharply. In fiscal 2006, fully half of all pharmaceutical patent settlements (14 of 28) contained such payments. Brand-name manufacturers, seeing the potential to continue reaping monopoly profits, have taken advantage of this apparent judicial leniency. Since some courts are allowing it, who can blame the companies? They have a duty to their shareholders to maximize profits.

Our case against Cephalon, which may ultimately reach the Supreme Court, will determine more than whether Americans taking Provigil are left to spend hundreds of millions of dollars more than they should for their medication. It will also determine whether the courts have effectively demolished the Hatch-Waxman Act and whether early generic competition will end altogether. If Cephalon prevails, generic companies will stop trying to be the first to compete; they will instead try to be the first to be paid not to compete.

And therein lies the case’s true significance.

The Federal Trade Commission announced yesterday that it has filed a lawsuit against Cephalon for paying off four generic drug companies not to bring a generic version of its sleepiness drug, Provigil to market. As the FTC’s press release says:

The Federal Trade Commission today filed a complaint in federal district court against Cephalon, Inc., a pharmaceutical company based in Frazer, Pennsylvania, for a course of anticompetitive conduct that is preventing competition to its branded drug Provigil. The conduct includes paying four firms to refrain from selling generic versions of Provigil until 2012. Cephalon’s anticompetitive scheme, the FTC states, denies patients access to lower-cost, generic versions of Provigil and forces consumers and other purchasers to pay hundreds of millions of dollars a year more for Provigil.

According to the Commission’s complaint, filed in the U.S. District Court for the District of Columbia, Cephalon entered into agreements with four generic drug manufacturers that each planned to sell a generic version of Provigil. Each of these companies had challenged the only remaining patent covering Provigil, one relating to the size of particles used in the product. The complaint charges that Cephalon was able to induce each of the generic companies to abandon its patent challenge and agree to refrain from selling a generic version of Provigil until 2012 by agreeing to pay the companies a total amount in excess of $200 million. In so doing, Cephalon achieved a result that assertion of its patent rights alone could not.

What’s somewhat surprising about the FTC’s case is that it is coming now, as opposed to earlier. There have been private class actions against Cephalon for this alleged scheme for several years. PAL member AFSCME District Council 37 Health & Security Plan is a plaintiff in the main class action concerning this. A consolidated class action complaint was filed in that case, In re Modafinil Antitrust Litigation, in October 2006, over 16 months ago. To read more about that class action, go here. If you are a patient who has taken Provigil and wants to be kept updated about the class action, fill out this form and note that you are interested in the Provigil case.

Here’s the FTC’s complaint.
Here’s the class action complaint.