Q: How will a recent Supreme Court decision impact prescription drug costs?
A: With a 5-3 ruling in June, the U.S. Supreme Court helped speed up opportunities for cheaper drugs for patients currently stocking their medicine cabinets with costly, brand-name prescription drugs. At issue are financial settlements, called “pay for delay,” between brand-name and generic drug makers that effectively postpone the time in which a generic Rx copy can hit the market. Here’s how it works: a pharmaceutical manufacturer pays off a generic drug company to settle patent litigation in exchange for delaying entry of the generic version of the brand-name drug into the market. This anti-consumer practice only serves to extend the time before patients can purchase cheaper generic drugs. If the average delay is 17 months and a consumer is paying an 85 percent mark-up on a monthly $250 prescription, that monthly mark-up adds up big time. The high court’s ruling sends a strong signal that these back room deals are indeed subject to the nation’s anti-trust laws. That’s good news for consumers and the taxpaying public. These settlements turn the free enterprise system on its head and do not square with America’s anti-trust laws. According to numbers cited by the Federal Trade Commission (FTC), U.S. pharmaceutical sales surpassed $320 billion in 2011. The FTC also points out that when a generic version of a brand-name drug enters the market, the price dramatically decreases to about 15 percent of the original price tag. Talk about a dramatic price swing. Such a huge fluctuation adds up to sizable savings for patients and for taxpayers subsidizing government health care programs for the elderly, disabled and veterans.
Q: What more can be done to get more affordable generic drugs to reach the pharmacy shelves sooner rather than later?
A: As the ranking Republican on the Senate Judiciary Committee, which has legislative authority over the nation’s anti-trust laws, I have called into question market-distorting practices across the economic spectrum, from vertical integration in the livestock industry, to OPEC’s manipulation of the supply and demand of oil, and the drug industry’s quest to keep the price of drugs on the pharmacy shelf high for as long as possible. The Supreme Court has taken a good first step towards ending this anti-competitive behavior. However, a legislative remedy making these settlements presumptively unlawful would make an even bigger impact on consumers’ pocketbooks. I’ve introduced legislation with Senator Amy Klobuchar of Minnesota to help put an end to these pay-for-delay settlements that hurt the consumer and the taxpayer. Our bipartisan reform is one I’ve pushed for many years on behalf of consumers. According to the Congressional Budget Office, our legislation would accelerate the availability of lower-priced generic drugs, generating more than $4.7 billion in taxpayer savings over 10 years. Instead of funneling untold millions of dollars into twisted litigation settlements which keep costs high for the American people, the pharmaceutical industry should channel those dollars towards research and development for the next innovative cure. Pay-for-delay deals distort the market, force consumers to pay more for their medicines, and add an exorbitant burden to the deficit. Considering the taxpaying public pays for one-third of prescription drug spending in the United States, it’s time for the drug companies to swallow a dose of marketplace fairness. Pay-for-delay does more harm than good.