Pharmaceutical Companies

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How “Pay-for-Delay” Adds to Drug Prices

(Jupiter Images: Getty)

(Jupiter Images: Getty)

Americans spent more than $300 billion on prescription drugs in 2010. As most consumers know, generic drugs are cheaper than their brand name counterparts. A federal report found consumers saved more than $1 trillion between 1999 and 2010 by using generic drugs. Generic drugs can’t be made or sold until the patent on the original drug expires, usually after 20 years.

But what you might not know is that pharmaceutical companies have long engaged in pay-for-delay. These are payments to generic manufacturers to stay out of the market–to not sell cheaper versions of the drug. According to a Federal Trade Commission report [PDF], these deals have cost consumers $3.5 billion each year in higher prescription drug costs.

“These agreements are instrumental in keeping [drug prices] enormously high.”
Today, California Watch reports that the California Supreme Court has agreed to take up the issue of pay-for-delay by reviewing a decade old class-action lawsuit having to do with the antibiotic Cipro, originally manufactured by Bayer.

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