Here’s Why Drug Prices Remain High Despite Generic Laws

Michael Bennett
October 20, 2015 - 38 Views

Whenever a drug manufacturer creates a new drug, it is patented for a set period of time. Once that patent ends, other manufacturers can create the same drug, turning it into a generic product, effectively lowers the price of that particular medicine. At other times, however, manufacturers are able to find a loophole that prevents the generic product from being produced and released to the market.

Doryx

An example of this technique happened about a decade ago with the Doryx product. Doryx is an antibiotic with doxycycline as the active ingredient. It was manufactured by Warner Chilcott, which provided it in a capsule form. Mylan, a generic manufacturer, had been waiting to release a generic version of doxycycline to the market when Warner Chilcott suddenly made a seemingly minor change to its product. Instead, of providing it in capsule form, it now released it in tablet form. The result of Warner Chilcott’s change to its product was that Mylan’s generic product, which was also in tablet form, could not be released.

Product Hopping

This tactic is a surprising method that some big pharma companies are using in order to prevent the availability of generic versions of their drugs, thus, keeping the prices of those drugs high. This strategy, which has come under a lot of criticism, is known as product hopping and is now being considered in the anti trust laws.

“Prior to facing generic competition, a brand drug company can, for example, simply withdraw its original product, forcing consumers to switch to the reformulated brand drug and enabling the branded company to keep its market exclusivity and preventing consumers from obtaining the benefits of generic competition.”

Legal Response

Warner Chilcott is one of various manufacturers that is now finding itself fighting legal battles against product hopping. This particular drug company has been charged of using another product hopping strategy, which is introducing score lines to its tablets. By stopping the production of its unscored tablets it is able to make use of the patent laws to suit its purpose, which is prevent the production of generic versions of the drug.

After making those minor changes to their products, to prevent the availability of the generic drugs, companies like Warner Chilcott simply file lawsuits against the generic manufacturers, accusing them of patent infringement. This is what they did in 2012 against Mylan when the generic drug company produced a generic form of Doryx. Fortunately, the result was not as expected by Warner Chilcott.

“Mylan, based in Canonsburg, Pennsylvania, won a ruling in federal court in Newark, New Jersey, where U.S. District Judge William Martini lifted his Feb. 8 order barring the company from offering a generic version of Doryx in 150-milligram delayed-release tablets.”

Product hopping is an unfair strategy that became more and more prevalent in recent years. The pharmaceutical giants use it in order to prevent generic brand names to come on the market, thereby allowing them to keep the original, branded drug at a high price. The Federal Trade Commission is one of various consumer groups that is attempting to address this problem. Although companies like Warner Chilcott are filing patent infringement suits against pharmaceutical companies that do release generic drug versions, the consumer groups and the FTC are now also filing suits, claiming that product hopping is in direct violation of antitrust laws. This is because the tactics mean consumers have no option but to pay for expensive drugs.

Mylan is one of the companies that has taken on such a lawsuit against Warner Chilcott. In April 2015, they took it to court in Pennsylvania, but the judge believed Warner Chilcott’s tactics were above board and not in violation of antitrust law. However, Mylon appealed this decision and a number of consumer groups joined forces with Mylan in this appeal. In support of the efforts of Mylan and the consumer groups, the Federal Trade Commission released an official brief to be included in the appeal.

“Without automatic substitution, the disconnect between prescribing physicians and payors often insulates brand-name prescription drugs from effective price competition, and a given drug may be priced at monopoly levels even if other drugs are therapeutically similar.”

Other consumer groups that added their voice to that of Mylan include the Consumers Union, the policy and advocacy arm of Consumer Reports, AARP, Consumer Action, Consumer Federation of America, Families USA, and U.S. PIRG. Together, they supported the appeal by filing an amicus brief.

“The Latin phrase amicus curiae means “friend of the court”. In common usage, the phrase is shortened to amicus. An amicus curiae submits a written essay to a court, called an amicus brief, that provides the judges with new information or a different perspective from what the parties provided to the judge.”

The fact that the Federal Trade Commission became involved is very significant. Rather than jointly signing the amicus brief entered by the various consumer groups, it sent its own. Together, they have made it clear that they feel that if the judge’s original decision is not overturned at appeal, other drug companies will start product hopping as well. If Mylan does not win its case, it will be a clear message to other manufacturers that these types of tactics are perfectly acceptable. The result would be that consumers would be forced to pay the high price of branded drugs for their treatment.

If a generic drug cannot be released to the market, consumers could foot bills reaching in the hundreds of millions of dollars. A starch warning about this has come from George Slover who is both a senior policy counsel from Consumers Union and the American Antitrust Institute.

“If product hopping is allowed to become standard practice, the cost to consumers could be staggering.”

Slover is hopeful, however, and believes that courts may declare that the practice of product hopping is illegal. This is also due to the fact that the Second Circuit, a different appeals court, did indeed rule that product hopping was illegal. This was in relation to Namenda, which is Actavis’ drug for treating Alzheimer’s.

“In New York v. Actavis, No. 14-4624, the U.S. Court of Appeals for the Second Circuit held that such product hopping may violate antitrust laws and further, upheld an extraordinary nationwide injunction requiring defendants Actavis and its subsidiary Forest Laboratories to continue manufacturing the older version of their Alzheimer’s drug Namenda for 30 days after generic forms of that drug become available.”

Unfortunately, before the legal aspects of product hopping become clear, there is likely to be a long legal battle. Nevertheless, it has been done before. Consumer advocates had fought for over a decade to successfully stop the practice of “pay-for-delay” or “pay-to-delay” deals.

“Drug makers have been able to sidestep competition by offering patent settlements that pay generic companies not to bring lower-cost alternatives to market.”

It was ruled by the U.S. Supreme Court in 2013 that antitrust laws did apply to “pay for delay” practices after the FTC took it to court. It is hoped that the same results will be obtained with regards to drug hopping.

Michael Bennett

About Michael Bennett

Michael Bennett is Editor-in-Chief of Consumer Protect.com. Since 1999, he's worked across a multitude of areas of consumer protection including defective products, environmental issues, identity theft, predatory lending and more. If you find his articles helpful please share them with your readers.