Americans with cancer, heart disease, epilepsy and other conditions have been forced to pay an average of 10 times more than necessary for at least 20 blockbuster drugs, according to a report released today by Community Catalyst and the U.S. Public Interest Research Group (U.S. PIRG).
The report, "Top Twenty Pay-for-Delay Drugs: How Drug Industry Payoffs Delay Generics, Inflate Prices and Hurt Consumers," reveals that these drugs were subject to an industry practice called "pay for delay," in which brand-name pharmaceutical companies pay off generic drug manufacturers to keep lower cost equivalents off the market, forcing consumers to pay higher brand-name drug prices.
The top 20 list comes after the U.S. Supreme Court ruled that pay-for-delay agreements may be illegal under antitrust law.
"It's outrageous that drug companies are paying off the competition to keep prices high," said Laura Etherton, U.S. PIRG health care policy analyst. "Because of this, Americans pay inflated drug prices, or go without necessary medication. This needs to stop."
Pay-for-delay deals have postponed as many as 142 generics from coming to market, according to Federal Trade Commission (FTC) reports. But since the details of these deals rarely become public, consumers have been largely kept in the dark about the problem.
"These 20 drugs from the report are just the tip of the iceberg," said Wells Wilkinson, Director of Community Catalyst's Prescription Access Litigation Project. "These schemes by the drug industry have forced consumers to pay billions more for just these 20 drugs. How many generics of other 'blockbuster' drugs have been kept out of reach by these backroom deals? How much has pay for delay cost consumers overall?"
Karen Winkler found out about the issue the hard way. A pay-for-delay deal made it harder for her to access the medication she needed for her multiple sclerosis-related fatigue. "I needed Provigil just to function, but it cost me $500 a month out-of-pocket, even with insurance," she said. "For years, I'd skip pills or split doses just to get by, and eventually had to stop taking my medicine because I could no longer afford its high price."
Pay-for-delay deals blocked the generic version of Provigil for six years, until last October. Karen now pays a $16 co-pay every three months for the medication. "I'm back to living my life," she continued. "But no family should have to go through what we did."
Key findings of the report:
- Pay for delay has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease to depression and bacterial infection;
- Payoffs have delayed these 20 generic drugs for five years on average, and as long as nine years;
- The top 20 brand-name drugs cost an average of 10 times more than their generic equivalents, and as much as 33 times more; and
- Combined, brand-name drug companies made an estimated $98 billion in total sales of these 20 drugs while the generic versions were delayed.
Key drugs highlighted in the report include:
- Tamoxifen: People with breast cancer waited nine years for generic competition to bring down the cost of this drug, a widely used treatment for hormone-receptive breast cancer, due to a pay-for-delay deal.
- Lipitor: People with high cholesterol pay as much as $205 for a 30-day supply of Lipitor. Now that the generic version is available, it costs $18. During the time the generic was delayed, Pfizer made $7.4 billion in sales of Lipitor in the last year alone.
- Lamictal: People with epilepsy can pay as much as $465 for brand-name Lamictal – 33 times the price of the generic, now that it is finally available. Pay for delay postponed the generic for three years.
- Cipro: The brand-name version of the antibiotic Cipro can cost $346 for the most commonly prescribed quantity, while the generic costs just $23. Bayer made a deal with generic drug makers to delay the drug for seven years.
- Provigil: Many multiple sclerosis patients and others faced paying up to $1,200 a month for this drug because the brand-name manufacturer, Cephalon, paid four different generic drug manufacturers a total of more than $200 million to keep the generic version off the market until 2012.
- Pay-for-delay deals are currently blocking generic versions of at least five drugs: Aggrenox (stroke prevention), Niaspan (high cholesterol), AndroGel (synthetic testosterone), Nuvigil (narcolepsy), and Nexium (heartburn and GERD).
The Supreme Court ruling is likely to lead to further legal challenges to pay-for-delay deals. But while litigation may ultimately help consumers recover some of the unfair costs these deals have caused, consumer advocates are calling on Congress to finish the job and pass legislation to put a stop to the practice.
"Consumers have been stuck paying more than they should have to for needed medication. Now, they're looking to Congress to put a stop to this practice," said Etherton. "Lawmakers should end these drug company shenanigans that inflate drug prices and hurt the people that rely on prescription drugs."
There is bipartisan support for ending pay for delay. Sens. Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) are sponsoring S.214, the Preserve Access to Affordable Generics Act. The bill declares that pay-for-delay deals are presumed anti-competitive and unlawful, and it authorizes the FTC to enforce the law by initiating proceedings against companies that participate in such deals.
Sens. Al Franken (D-MN) and David Vitter (R-LA) are sponsoring S.504, the FAIR Generics Act. The bill reduces the incentive for generic and brand name drug companies to make pay-for-delay deals by letting a second generic drug company enter the market if the first generic company takes a pay-for-delay deal.
U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.
Community Catalyst is a national, nonprofit consumer advocacy organization that works in partnership with national, state and local organizations, policymakers, and philanthropic foundations to ensure consumer interests are represented in communities, courtrooms, statehouses and on Capitol Hill. The organization's Prescription Access Litigation project has challenged the pay-for-delay deals blocking consumer access to affordable Provigil, Cipro, K-Dur, and Tamoxifen.
Laura Etherton, U.S. PIRG