Healthcare Drug Benefits for Union Families at Risk
Union Leaders’ Struggle to Control Rising Drug Costs as Brand Pharmaceuticals
Fight Dirty for Profits
If brand name pharmaceutical companies get their way, your ability to purchase new generic prescription drugs at a reduced cost over expensive name brands will disappear, and along with it, future union drug benefits that remotely resemble those afforded union families today.
The costs of prescription drugs are slowly crippling the ability of unions to provide healthcare drug benefits without painful reductions in overall coverage. Labor leaders have long called upon their membership to use generic drugs as an alternative to brand names as a means to safeguard available funds and continue benefits for both the laborer and their family members. But the ear of Congress may be held by pharmaceutical lobbyists, making limitations to your future drug benefits all but guaranteed.
As the Republican controlled congress battles to regain the trust of their constituents at home before the November elections, leaders of the pharmaceutical industry (who paid to have their “Yellow Brick Road to the Hill” paved) are reminding them of their debt and expecting payment on demand.
Their efforts are not to outright ban generics, but more so, make the ability to challenge a current drug patent (held by a large pharmaceutical company) a no-win and costly proposition for the manufacturer of generic drugs. It appears that the 10-year patent exclusive accompanied by exorbitant prices to help recoup the cost of developing new drugs (multiple times over) is not enough for these powerful players, never mind the record-high profits they currently enjoy, paid for by our aging and sick.
Challenging a brand-name drug patent when it’s about to expire for the purpose of producing a generic-equivalent is a lengthy and expensive legal maneuver. Brand pharmaceutical companies will employ every trick to win multiple, 30-month extensions on patents, often over something as simple as a color change to the pill. Their success in delaying a more affordable generic-equivalent is legendary and hurts consumers most.
When a generic drug manufacturer challenges a patent held by a brand name pharmaceutical company and wins, they are given a six month exclusive period to produce the drug as a new generic before other generic manufacturers can do the same. This affords the company who spent a fortune (and sometimes years) challenging the major pharmaceuticals an opportunity to recoup some of their costs before other generic manufacturers can jump into the now-unrestricted market.
The outcome of those hearings will determine the future access (or not) to affordable generic medications, as well as the structure of drug benefits that working men and women rely upon.
Consumers enjoy an immediate decrease on average of 40% below the price of the name brand drug during this exclusive time period. Once the six-month exclusive has passed, the average cost of a generic drug falls to about 10%-30% per pill of the original, high priced patented drug. A drug costing $15 per pill, for example, falls to about $6 during the six month period, and falls again to $1.50 - $3.00 once the six month period expires.
It seems appropriate to me that if we grant brand companies ten years to overcharge Americans as a means to recoup the research and development costs involved with bringing a new drug to market, then six months for a company who fought the long and expensive battle to make it cheaper after the patent expires is not such a sacrifice.
The big-brand pharmaceutical companies disagree. Brand pharmaceutical companies are pushing to eliminate the six-month exclusive rights of any generic manufacturer that challenges their patents (and wins) because they know that without it, the generic manufacture who looks to take them on will never be able to recoup their expense of the court challenge. If a generic manufacturer can’t recoup at least some of their costs to bring a drug to market that consumers can better afford, they won’t challenge the inventor pharmaceutical at all.
If their back-door ploy works and generic companies are in essence, barred from legally challenging brand pharmaceuticals by financial default, big pharmaceutical wins, and of course, consumers will be forced to continue paying the full, inflated price for the original drug for years, maybe decades to come.
This summer, congressional hearings will begin to examine a generic manufacturer’s right to six months exclusivity after successfully winning the right to produce a generic equivalent in court. The outcome of those hearings will determine the future access (or not) to affordable generic medications, as well as the structure of drug benefits that working men and women rely upon.
Meanwhile, brand pharmaceutical manufacturers aren’t waiting around. In unprecedented fashion, they’ve struck a contingency plan of attack …pay generic manufacturer a bundle to drop their challenge.
The art of legal bribes goes something like this: Generic Company A decides to challenge a brand name pharmaceutical in court and it looks like they might win – a good thing for consumers. But it’s a bad thing for the pharmaceutical company because the drug can be sold by others for up to 95% less as a generic. The pharmaceutical company makes the generic company a deal they can’t refuse.
The brand name manufacturer offers the generic company a significant portion of their profits on a medication that costs, for example, $15 per pill for 10 years (on average) if they’ll drop the court challenge to their patent. The generic company saves all the legal costs of the challenge, and while they can’t make the drug themselves for 10 years, they’ll still reap an easy percentage off the inflated profits of the brand name. Patients and drug benefit programs will be forced to continue to pay the premium price without an effective generic equivalent. Since 2005, an estimated ten pay-off deals to drop patent challenges have been entered into.
Quoted in the Washington Post (April 26, 2006), FTC Commissioner Jon Leibowitz said, “Until recently, payments by brand-name companies to generics were the exception, but now they're the rule," adding, "They appear to be a new way to do business, and that's very troubling.”
Generic drugs, which comprise an estimated 50% of the most effective medications available today, including those for chronic or acute heart and cardiovascular condition and seizure disorders, are one of the few ports in the storm for consumers ill-equipped to meet the rising costs of healthcare.
Unless your congressman and house representatives hear from you, the pharmaceutical industry will continue to have policy control over your need for drugs at an affordable cost. Brand pharmaceutical manufacturers will continue to make historical profits on drugs over and beyond their original 7-10 year patent protection.
Can you afford to be quiet? I don’t think so.
Cliff Horwitz welcomes your comments on this article and can be reached at (312) 372-8822, or office@horwitzlaw.com.