Vials of flu vaccine.

Matt Rourke, Associated Press


The Federal Trade Commission has an excellent backgrounder on settlements between brand-name drug manufacturers and the makers of generic drugs. Read the report, "Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions".

Prescription for drug costs: Congressional will

  • Article by: EDITORIAL
  • Star Tribune
  • February 16, 2013 - 7:14 AM

A common-sense bill to speed the availability of less-expensive generic drugs will be an important test for Congress.

Policymakers have long talked a good game about rooting out waste in the nation's unaffordable health care system. But when it comes to reducing dollars spent questionably, little gets accomplished.

The result: The prestigious Institute of Medicine estimates that 30 percent of the nation's total annual health care spending -- an amount that works out to more than $765 billion a year -- pays for unnecessary services, excessive administrative costs, inefficiently delivered services, fraud, missed prevention opportunities, and overpriced goods and services.

The fate of a newly reintroduced bill that would crack down on dubious industry deals that delay sales of generic drugs will tell us if policymakers are serious about doing everything they can to ensure that private and public health care dollars are spent prudently.

The bipartisan bill, called the Preserve Access to Affordable Generics Act, has languished in Congress for several years. This month, the senior senators from Minnesota and Iowa -- Democrat Amy Klobuchar and Republican Chuck Grassley -- teamed up for another push to make this important consumer and taxpayer protection measure a reality. Their effort is timely and a welcome addition to efforts underway in the Affordable Care Act to reduce health care costs without sacrificing quality.

In January, a federal agency that has long-sounded the alarm about problematic pharmaceutical patent settlement agreements issued a disturbing report. These agreements are often dubbed "pay for delay" arrangements because they can involve payoffs from brand-name drug firms to generic manufacturers to delay the sale of less expensive versions of a drug.

The Federal Trade Commission reported last month that the number of these anticompetitive deals has risen sharply. There were 40 potential pay-for-delay deals in the 2012 fiscal year. That's a 43 percent increase over the prior time period, and the highest number since the FTC began tracking these types of settlements seven years ago.

Although an FTC spokesman declined to say which brand-name drugs had been swept up in these arrangements, there's a good chance that consumers paid more than they should have for common medications for longer periods of time. The agreements over the past year "involved 31 different brand name pharmaceutical products with combined annual U.S. sales of more than $8.3 billion," according to the FTC report.

The Generic Pharmaceutical Association has been highly critical of the FTC's report, saying that such deals save consumers money and bring generics to market sooner by avoiding lengthy court fights over patents. "The FTC is wrong on the facts, wrong on the public policy and wrong on the law,'' said the organization's president and CEO Ralph Neas in a statement.

However, a 2011 analysis by the nonpartisan Congressional Budget Office found that enacting the proposed legislation would cut total U.S. spending on prescription drugs by $11 billion from 2012 to 2021. Federal programs, such as Medicare and Medicaid, would save about $4 billion of that. Generics cost significantly less than brand-name drugs. Almost 70 percent of the prescription drugs dispensed each year in the nation are generics, yet they account for only 16 percent of U.S. spending on prescription drugs.

The proposed legislation does not yet have a companion bill in the House. It also faces serious headwinds from industry lobbyists, a reminder that "waste" in the health care system is also usually a revenue stream for firms specializing in medical goods or services.

Klobuchar and Grassley, however, are right to put a priority on pushing for this measure. Said Klobuchar: "We are living at a time where we need to save consumers money and we need to save the government money."


An editorial of the Star Tribune (Minneapolis)

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