Pharmaceutical companies frequently pay generic drug competitors money to delay releasing their cheaper versions of brand-name drugs. The result is a large financial reward for the pharmaceutical companies, both name brand and generic manufacturers, and a substantial cost to American consumers and insurance companies. A recent article explains that, within America, 80% of all prescriptions for medicines and vaccines are made by generic manufacturers. However, a far smaller percentage of the $325 billion annual prescription drug total is paid to generic manufacturers.
The Federal Trade Commission is officially leading the charge against the so called “pay-for-delay” practices. The Obama Administration is officially denouncing these pay-for-delay deals that add an estimated $3.5 billion to consumer’s annual drug bills. As U.S. Solicitor General Donald Verrilli recently noted, “once a generic drug gets on the market and competes with a brand-name drug, the price drops 85 percent.” The American Medical Association also condemns the practice arguing that the pay-for-delay arrangements “undermine the balance between spurring innovation through patents and fostering competition through generics.” The United States Supreme Court is scheduled to hear oral argument next week in a case involving the $1.2 billion annual sales male hormone treatment AndroGel produced by AbbVie Inc. The case is being closely monitored by everyone involved in the pharmaceutical industry.