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Suspicious ‘Profit Sharing’ Deals between Makers of Generic and Branded Drugs under Scrutiny

Commentary

Posted 03/28/2013 | AMAC 


‘Seniors wind up paying the cost of these so-called pay-for-delay settlements’ - 

BY DAN WEBER

BOHEMIA, NY, Mar 29 – Generic drug companies get paid by Big Pharma to delay production of cheaper alternatives.  It’s a mega-million dollar practice that has come under scrutiny by the Supreme Court, which heard arguments this week regarding the legality of such transactions, according to the Association of Mature American Citizens.

“It is consumers – seniors, in particular – who wind up paying the cost of these so-called pay-for-delay settlements,” Andy Mangione, a senior AMAC executive, said.

Here’s how it works.  A company that produces generic drugs formulates a less expensive equivalent to its brand name counterpart and sues to begin production and marketing before the brand’s patent runs its course.  The maker of the brand name drug turns around and pays a multi-million dollar ‘settlement’ to buy a few more years for its monopoly, Mangione explained.

“For lack of a better description, the generic companies and the brand name companies that engage in such practices are ‘colluding’ to keep certain generic drugs on the sideline and both are reaping huge rewards.  One gets a big-buck payoff and the other buys time to sell more of its profitable brand name product.  Meanwhile, seniors – many of them on low, fixed incomes – are forced to pay for higher priced branded drugs.”

Mangione appeared this week on the Willis Report, which airs on the Fox Business News channel, and pointed out that retirees in the U.S. can pay more than half of their incomes for pharmaceuticals.

“As a matter of fact, we know for a fact that a lot of AMAC members are still working past 65 in order to pay for their healthcare, including their medications.  So these settlements between generic manufactures and prescription drug manufacturers are skewing competition,” he told host Geri Willis.

He pointed out that the kinds of “profit-sharing” settlements that the Supreme Court is investigating are on the rise.  In 2005, three such deals were made, but last year 40 purported settlements were made, he noted.

A court ruling on the practice is expected in June.

ABOUT AMAC

The Association of Mature American Citizens [http://www.amac.us] is a vibrant, vital and conservative alternative to those organizations, such as AARP, that dominate the choices for mature Americans who want a say in the future of the nation.  Where those other organizations may boast of their power to set the agendas for their memberships, AMAC takes its marching orders from its members.  We act and speak on their behalf, protecting their interests, and offering a conservative insight on how to best solve the problems they face today.

ABOUT THE AUTHOR

Daniel C. Weber founded the Association of Mature American Citizens in the summer of 2007. Dan Weber sees AMAC as a way to unite citizens to defend our American way of life. To enrich the lives of AMAC’s members, Weber has assembled a package of benefits and discounts for Americans 50+ that they can get nowhere else.

More Articles by Daniel C. Weber

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