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Thumbs down: Settlements by drug firms are no bargain for public

Mar. 26, 2013 @ 10:55 PM

The all-too-common practice of "pay-to-delay" deals between makers of brand-name drugs and their generic competitors went on trial this week.

The U.S. Justice Department is asking the U.S. Supreme Court to end such deals, saying they are anti-competitive. It's difficult to see how consumers aren't made the patsies by such arrangements.

These settlements occur after companies wanting to make a generic version of a particular drug challenges the patents that give brand-name drugs a 20-year monopoly. The generic drugmaker wants to start making and selling a generic version years before the patent ends. The brand-name drugmaker often countersues. If the two are uncertain of the case's outcome, they often reach a settlement allowing the generic company to sell a cheaper generic version after a few years, but years before the drug's patent would expire. That deal usually comes with a sizable payment from the brand-name company to the generic drugmaker.

The result: The brand-name manufacturer continues to make millions of dollars for a few more years and pays the generic company millions to wait. So who foots the bill for those millions of dollars? Consumers do, even though there was never a determination about whether the brand-name drug's patent was valid or not.

In essence, the two manufacturers are collaborating to set the market price for that particular drug. Is that not anti-competitive? Is that not creating a monopoly that consumers can't avoid? Such deals cost American consumers up to $3.5 billion a year, the government says.

Let the brand-name and generic companies fight their patent issues to a conclusion. Don't let them continue profiting at a huge expense to consumers.

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