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Home » Health, News

Trying again to stop deals that delay generic drugs

Submitted by Debra on Wednesday, 4 February 2009 2 Comments
If a conspiracy falls in the forest and everyone within a country mile hears it, are big companies still guilty of cheating the public?

The Federal Trade Commission thinks so. It joined California Attorney General Jerry Brown this week in suing four companies in federal court in California to try to stop the deal.

Problem is, the trade commission's tried similar lawsuits before against drug makers who get together for a rousing round of "keep the generics off the market for fun and profit." It failed at least in part because the Bush Justice Department sided with the companies.

Usually, a conspiracy is a secret plot. Not this one. It's played out for years in open court and news releases. Everyone from drug manufacturers to the government to Congress knows how it works. No one's been able to stop it, though.

The game works like this:

  • A company figures out how to produce a generic version of a drug still under patent. In many cases, the general defense is "we used your ingredients, but we didn't rip off your recipe."
  • The patent holder sues in federal court to block the generic.
  • Meanwhile, the patent holder and would-be generic producer figure out that everyone could save a pile of lawyer's fees if the patent holder would pay the other company to not produce the generic. The lawsuit goes away, and everyone's happy.

Everyone, that is, except consumers who continue to pay 50 to 80 percent more for a brand name than they would for a generic.

There are other variations of the game. Sometimes, the patent holder lets the generic go on the market in exchange for part of the royalties. In other cases, the patent holder rushes a generic into production when faced with the threat of competition.

That's what happened this fall when AstraZeneca agreed to let Par Pharmaceutical produce a generic version of the asthma medication Pulmicort. The move came the same day the  U.S. Food and Drug Administration approved Israeli company Teva Pharmaceutical's generic version of the same drug. AstraZeneca is suing Teva.

Par is one of the companies included in the new lawsuit, which involves the testosterone-replacement drug Androgel.  The brand-name version is Solvay Pharmaceuticals' second-highest grossing drug, earning about $400 million in annual sales, according to the lawsuit.

Shortly after the FDA approved generic versions that Par, Watson Pharmaceuticals and Paddock Laboratories had planned, Solvay cut a deal: The three would get a share of Solvay's profits in return for holding off on a generic until 2010

The FTC contends the maneuver violates the Hatch-Waxman Act, passed in 1984 with an aim of getting money-saving generics to market more quickly.

Drug company lawyers spin it as a good deal for the public because the agreement gets the medication to market five years before the patent expires, CNN Money says.

Even if the FTC loses this round - and it might not without the Bush Justice Department around to shoot it in the back - there could be legislative help on the way. Wisconsin Democrat Herb Kohl introduced a bill Tuesday, the same day the suit was filed, that would make it perfectly clear that such deals are illegal.

It's similar to a bill he introduced in 2007 that wound up with 10 co-sponsors. One was Barack Obama.

What do you want to bet the Justice Department changes its position this time around?

Copyright 2009 Debra Legg. All rights reserved.

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2 Comments »

  • Vanilla Cokehead said:

    another reason the profit motive needs to be cleansed from the medical field. You have drug company execs putting money ahead of what’s best for patients. Makes me want to vomit.

    - 5 February 2009 at 9:26 am
  • MtnMom said:

    Good grief! I agree with Vanilla Cokehead: makes ya wanna barf! Healthcare for profit: it’s all about greed. Hopefully there will be progress made in limiting the game. What’s scary is that the health of human beings is the final chip on table. Not right!

    - 5 February 2009 at 11:00 am