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Congress should end drug company deals that keep inexpensive generics off market

Tuesday, Jan. 16, 2007

Congress Should End Practice that Lets Brand-Name Drug Companies Pay Generic Makers to Keep Inexpensive Drugs Off the Market

CU testifies at Senate hearing on patent settlements between drug companies

(Washington, D.C.) – Consumers Union is urging Congress to end the practice of allowing brand-name drug companies to pay off makers of generics to effectively keep cheaper prescription drugs off the market for years.
“We’re seeing brand-name drug companies pay off generics makers under the guise of a settlement to delay getting cheaper prescription drugs on the market,” said Michael Wroblewski, project director with Consumers Union, publisher of Consumer Reports. “The brand-name companies know the longer they can block generics, the more money they can make from consumers, insurers and the government.”
Wroblewski is to testify Wednesday before the Senate Judiciary Committee on the practice of using patent settlements to compensate generic drug applicants in order to restrict generic market entry. Wroblewski said these types of settlements should be declared “unfair methods of competition,” and that Congress should not wait for the courts to act on the issue.
“These settlements between drug companies jeopardize the health of millions of Americans who have difficulty obtaining safe and effective medicines at affordable prices,” Wroblewski said.
Click here to read the full testimony.
Wroblewski said total profits available to a brand-name company from sales of its drug prior to generic entry exceed the combined profits of both the brand-name and generic applicant after generic entry. The upshot is, a brand-name company has a powerful incentive to pay the generic applicant to delay entry, because this payment is still less than what the brand-name maker would lose once a generic enters the market.
“The reality is, a generic applicant in some circumstances can earn more by entering into a settlement to defer putting a generic on the market than it could earn by competing in the market,” Wroblewski said.
“The pharmaceutical industry likes to claim that generic drugs harm their research and development of new drugs. But there has to be a better way to fund new drug research than by keeping safe, effective and inexpensive drugs off the market,” he added.
The FDA has reported that 394 drugs have pending generic applications with a backlog of more than 180 days. Consumers Union is also urging Congress to dedicate more resources to approving generic applications, and stop the abuse of phony citizen petitions to delay generic entry. Only three of 42 citizen petitions answered between 2001 and 2005 raised issues that merited changes in the agency’s policies about a drug, yet they delay a generic getting on the market.
CU also is asking Congress to clarify the law that allows for the development of generic versions of complex molecular biologic medicines – which often are expensive, life-saving therapies like cancer drugs.
Contact: Susan Herold
202 462-6262