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By Catholic Online (NEWS CONSORTIUM)

6/18/2013 (10 months ago)

Catholic Online (www.catholic.org)

U.S. Supreme Court says that while 'pay to delay' is not illegal, it hampers patients

Those in need of far less costly, generic drugs for their medical conditions got a boost this week by the Supreme Court. A longstanding practice by the U.S. pharmaceuticals industry to pay producers of generic copies to hold off introducing those low-cost drugs into the marketplace - known as "reverse payments," may now be challenged in court. Known colloquially as "pay to delay," the practice has been called anti-competitive and harmful for consumers, who are forced to pay more for drugs.

Brand-name drugs comprised just 18 percent of all U.S. prescriptions written in 2011, according to IMS Health. Yet they accounted for almost three quarters of revenue for the industry, worth some $320 billion a year.

Brand-name drugs comprised just 18 percent of all U.S. prescriptions written in 2011, according to IMS Health. Yet they accounted for almost three quarters of revenue for the industry, worth some $320 billion a year.

Article Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

6/18/2013 (10 months ago)

Published in Health

Keywords: Generic drugs, pharmaceuticals, Supreme Court, Hatch-Waxman Act of 1984, 'pay to delay'


LOS ANGELES, CA (Catholic Online) - The decision by the high court did not declare reverse payments to be outright illegal, as previously hoped, it does allow the Federal Trade Commission (FTC) to move forward with court cases against these arrangements. The decision also reversed previous rulings by lower courts.

"[T]he specific restraint at issue has the 'potential for genuine adverse effects on competition,'" Justice Stephen Breyer wrote for the majority in the 5-3 ruling. "Payment for staying out of the market keeps prices at patentee-set levels and divides the benefit between the patentee and the challenger, while the consumer loses."

Competition from generics can often lower drugs prices by up to 90 percent. The FTC, meanwhile, has estimated that agreements to push off such competition cost consumers some 3.5 billion dollars per year in the United States alone. The patents in question will likely not extend overseas, so the ruling will likely have little immediate impact outside of the United States.

Brand-name drugs comprised just 18 percent of all U.S. prescriptions written in 2011, according to IMS Health. Yet they accounted for almost three quarters of revenue for the industry, worth some $320 billion a year.

"The incentives to engage in research and development are already out there without these kinds of agreements," Scott Nelson, an attorney with Public Citizen, a public interest watchdog, told IPS.

"Signing one of these agreements will mean you may have to fight the U.S. government. Hopefully, the impact will be that companies think twice before entering into these types of agreements, which are basically just arrangements to split up profits under which consumers lose out."

The recent decision calls forth the memories of the Hatch-Waxman Act of 1984, meant specifically to push generic drugs onto the market more quickly. As Nelson noted, this law offers incentives for the development of new drugs such as decades-long patents.

The decision will let generics manufacturers to challenge these patents for a variety of reasons. According to a study by the FTC, until the early 2000s, the generics companies prevailed in these challenges almost three quarters of the time.

A version of this story was first published by Inter Press Service news agency.

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