Are ‘Pay-To-Delay’ Deals Good Or Bad?
8 CommentsBy Ed Silverman // January 13th, 2010 // 1:57 pm
Earlier today, the Federal Trade Commissioner Jon Leibowitz held a press conference to deride the ongoing practice in which brand-name drugmakers offer cash or some other inducement to their generic rivals which, in turn, agree to delay the marketing of lower-cost copycat meds.
“Pay-for-delay deals are a bad prescription for America: when drug companies agree not to compete, consumers lose,” Leibowitz says in a statement. “Ending this practice as part of heal care reform is one simple, effective, and straightforward way for Congress to help control drug costs.”
However, the Generic Pharmaceutical Association is on record as saying the deals give generic makers the right to enter the market before the patent on a brand-name drug expires, giving consumers earlier access to affordable meds. And sometimes, generic companies are paid for supplying ingredients.
What do you think?
Should these deals be permitted?
- No (67%, 81 Votes)
- Yes (33%, 40 Votes)
Total Voters: 121
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Mark
The “pay-to-delay” name is a misnomer. Generics are not delayed, often they reach the market sooner.
The payments are usually made because it is cheaper for a pharma company to pay the generic company to not challenge the patent, then it is for the pharma company to pay lawyers to fight it. Consider the payments an “out of court settlement”.
The only outcome of any anti-”pay-to-delay” legislation will be more money for the lawyers.
Mark
Condor
Mark makes the same error in his analysis above as Senator Hatch makes. But Senator Hatch knows better. I’ll give Mark the beniefit of the doubt, here.
The proposals I’m familiar with would only ban “collusive” patent settlements. That is, there would be tests to determine what is a bona-fide good-faith settlement of a disputed patent position, and what is simply an end-run around the Sherman and Clayton Acts.
What I find surprising — in the transparently specious approach of Senator Hatch (R, Big Pharma) — is this “sooner” timing argument in favor of all such deals, in the NY Times article. [Sadly, the NY Times runs the Senator's comments without an opposing comment from any FTC staffer.]
The Senator from Big Pharma (by way of Utah) suggests that even the “Pay to Delay” deals get generics to market “before” the last of the patents on the branded drugs expire. While true on its face, that argument disingenuously ignores an obvious probability.
The Senator conveniently fails to note that many of these collusive patent settlements are settling patent continuations, or “add-ons” — to the original patents. Many more of the original patents were very weak, legally — in the first instance. So, if the generic companies were to move forward, and manufacture, in many of these cases, it is likely that a judge would either hold the branded (narrow) patent was not infringed by the generic manufacturer, or would hold the branded patent invalid, altogether.
Either way, the generic drug would be “on market” years earlier, than under Mark’s or Senator Hatch’s suggestion — saving consumers billions, during those several additional years of head-to-head competition.
Finally — collusive settlements should be defined as those that result in payments that are out of proportion to the risks involved.
Namaste
Michael Kirsch, M.D.
I carry no brief for Pharma. I receive no income from them, but disclose they have brought lunch to my office. If this defines corruption, then I plead for mercy. I don’t have a firm opinion on whether pay-to-delay should be illegal, but it seems that every news story or broadcast on the drug companies is negative. No wonder, so much of the public regard them as nefarious profiteers. Sure, they may not be Eagle Scouts, but aren’t these the guys making the medicines to keep us well? Demonizing them has become political sport, but where’s the balance? http://www.MDWhistleblower.blogspot.com
Condor
Hello, Dr. Kirsch –
I do not — and most people, I think, would not — find you guilty of anything for accepting a lunch or two. The information flow is fine — and you are a big boy — you can sort out what’s hype, and what’s fact.
Lay consumers (your patients, not having gone to medical school) are a different story. But we digress, don’t we?
The issue here is whether Big Pharma misuses patent law to skirt the Clayton and Sherman Acts frowning views of monopolies and anti-competitive pricing tactics.
We are talking about collusive settlements — the kinds that ought to get the involved lawyers disbarred. I mean — that is what happens when medical malpractice, or personal injury lawyers put together fraudlent settlements — simply to bilk insurers.
In this case — “pay to delay” — we are all being bilked, out of free-market, competitively-priced generic medicines (the branded versions of which, generally speaking, have ALREADY enjoyed decades-long monopolies by law — under the patent-law scheme).
So, it is not so much demonizing pharma, as it is championing free-marketeering. [Funny (as in ironic) how so many dyed-in-the-wool capitalists -- in pharmas -- shrink away from capitialism, when it might mean their own ox will be gored.] If it is good for Detroit, it is good for the nation’s medicine chest.
Namaste
cliffintokyo
@MK–
There are recent media reports that a survey (by GAO no less) has shown that some US drug prices have doubled in the last 5 years or so.
On this evidence pharma businesses certainly appear to be ‘nefarious profiteers’.
Should pay-for-delay deals be squashed?
Your call on whether pharma biz deserves this slap-down for yet another egregious practice…
Michael Kirsch, M.D.
@Condor: “If it is good for Detroit, it is good for the nation’s medicine chest.”
Doesn’t the U.S. government control them now?
@Cliff & Condor: Yes, I expect pharma, like the rest of us to obey the law. I agree that the ‘pay to delay’ strategy should be examined, but I am reluctant to rush to judgment without understanding the issue more fully. If all I knew about the drug companies is what I read or hear in the media, I would think they should all be in Gitmo. I think there is (or, at least, may be) another side of the story that we’re not hearing.
Betsy
Of course the generics want to continue the current deal. They make a bundle from the original pharma and then they may jump the gun before the patent is up. But until this happens, the patient still doesn’t have the choice of buying cheaper drugs.
Remember - the patient is the least important player in this behavior model!
pharmavet
Folks, look at the big picture. Apotex markets over 250 generic drugs. The money they got in the Plavix deal will probably fund development of 6-10 new generics, which will ultimately benefit the patient. It’s a win-win-win situation.