Maybe nothing that drug companies do should shock us anymore, but a particular pharma tactic, which the FTC is now battling, is pretty alarming. The practice is called “pay for delay” and involves makers of branded drugs paying-off generic competitors to not produce their drugs. Bayer, for instance, paid $400 million to other companies in exchange for them not selling a generic version of Bayer’s Cipro drug.
For the drug industry, the practice is win-win: a branded drug maker can continue selling with no competition, and potential competitors receive money for doing nothing. For consumers, though, it’s far from a winning situation. The FTC estimates $3.5 billion yearly savings for consumers if the tactic was eliminated. About a third of the savings would go to the federal government through Medicare.
The legality of pay-for-delay tactics has been affirmed by appellate court decisions dating back to 2005. However, the tactics may soon be a thing of the past. Legislation in committee right now would close the loophole that permits this activity. Also promising is the new administration’s stated distaste for the practice. Hopefully, we can address this issue sooner rather than later, because it’s needlessly costing our country billion of dollars in the meantime.
Read the FTC’s perspective here, and see this story from the AP on the matter.
