Drug Patents and "Pay-For-Delay"--Drug Industry Payoffs That Need To End

I call your attention to a recent op-ed by a member of the Federal Trade Commission, Jon Leibowitz, in the Washington Post.

Commissioner Leibowitz writes about the growing practice of "colluding with competitors to keep lower-cost generic alternatives to prescription drugs off the market."

The Hatch-Waxman Act made it easier for generic drugs to enter the market once a name brand drug's patent has expired. Because of it, the health care system has saved many billions of dollars. For example, the generic versions of just four drugs, Prozac, Zantac, Taxol, and Platinol, will ultimately save payers $9 billion.

But that has been changing.

More recently, the patent holding drug companies have begun to payoff their potential competitors to delay bringing a generic alternative to market when the patent has expired. A case in point is drug maker Cephalon and its sleep apnea and narcolepsy drug, Provigil.

Cephalon paid its potential competitors $200 million to keep a generic version off the market for another seven years. By Cephalon's own estimate that will make the company another $4 billion--and $4 billion more in costs to health care payers.

The courts have recently supported this practice. As a result, during 2006, 14 of 28 pharmaceutical patent settlements included such arrangements. While this may yet get to the Supreme Court, there is a bill pending in the Congress to make the practice illegal.

Something as egregious as this deserves to be outlawed.