Over delay” agreements where a brand drug company

Topic: BusinessInternational Marketing
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Last updated: February 19, 2019

Overthe past decaden, prices for various non-generic lifesaving drugs ranging from treatmentsfor anaphylactic reactions such as epinephrine to deflazacort, a medicine forDuchenne Muscular Dystrophy, have skyrocketed.

The 1984 Drug Price Competitionand Patent Term Restoration Act gave pharmaceutical companies exclusiveprotections for formulating a new drug. If they created an original treatment,they had patent protection, which allowed them to dominate the market. That wasthe payment for the high costs and risks entailed in creating innovative drug therapies.But once the patent and the select grasp on the market ended, any drug companywas able to produce non-brand name forms of the same drug–so-called “generics.”And for a time, the method worked efficiently. However, the technique intendedto incentivize drug companies for their innovation is methodically being destroyed.

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Drugcompanies, the creators of the original therapies, are demolishing competitionthrough various maneuvers, and the outcome is extreme prices, beaten competition,and treatment quality issues. One method drug manufacturers use to preventcompetition is “pay for delay” agreements where a brand drug company pays off ageneric company not to launch a version of a drug. According to the FederalTrade Commission these contracts cost the American consumers an estimate ofthree and a half billion dollars in high drug costs each year. From 2009 to2016, Mylan increased the price of a two pack EpiPen from a hundred to sixhundred dollars. Valeant in 2011 abruptly raised the price of isoproterenolfrom $440 to around $2,700 a dose. Marathon Pharmaceuticals increased the price of Emflaza, to eighty-nine thousand dollars–a six thousand percent price rise.

And TuringPharmaceuticals raised the cost of Daraprim more than fiftyfold to sevenhundred and fifty dollars a pill. Citizen petitions requesting that the Foodand Drug Administration delay generic drug requests offer drug manufacturersanother method to delay generics from entering the market. By law, the FDA is obligatedto highlight these requests. However, these concerns are not actually being filedby individuals, but rather by corporations.

The FDA recently stated brandeddrug manufacturers proposed ninety-two percent of all requests. Many of these applicationsare filed near the date of the patent expiration, effectively preventing possiblecompetition for at least another 150 days.            Pharmaceuticalcompanies are now using a set of tactics to maintain their monopolies forever. Eradicatingthese strategies will not be easy. Corporations that produce generic drugsmust be permitted to acquire samples of new treatments to performbioequivalence reports. Next, pay-for-delay arrangements should be taken away, includinga company’s capacity to issue citizen petitions with the intent of delaying oppositionfrom generic companies. Imposing and encouraging high-quality standards for treatmentsmust also be an industry requirement.

To create transparency around medication value,the FDA has offered a system of grade marks for drug plants. In a financialstudy, lack of transparency “may have produced a market situation in whichquality problems have become sufficiently common and severe to result in drugshortages and surged prices.” (“Shining a light on prescription drug pricing”,2017) Another way to achieve greater transparency in medication quality is tochange the product labeling rules.

Labels should reveal the medication’s creator.As of now, pharmacies and hospitals don’t always know which establishmentactually produced the treatment. This makes it difficult to determine purchasedecisions on quality.

Generic medicines can provide greatbenefits for patients and health systems when there is sufficient competitionand quality, but their potential is currently unfulfilled, and it’s costing consumers.By eradicating preventive dispersal arrangements, pay-for-delay, and civilianpetitions, as well as providing more transparency around value, politicians,doctors, hospitals, and the heads of the FDA have a strong opportunity. They canstart to reverse rising health care costs and ensure quality medications areaccessible to the American population.

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