How big pharma blocks access to low-cost generic drugs

By: David Merritt, Blue Cross Blue Shield Association Senior Vice President of External Affairs

Prescription drugs play a critical role in helping millions of people enjoy longer, healthier lives. Yet, the unjustifiably high cost of medications is increasing pressure on federal and state budgets and putting families’ financial security and well-being at risk.

Blue Cross and Blue Shield (BCBS) plans are focused on helping members access the medicines they need at a price they can afford. However, through a little-known practice, pharmaceutical companies continue to keep affordable generics out of reach for the patients who need them.

It’s called “pay for delay” and here’s how it works:

1. A big brand-name drug manufacturer holds the patent for an expensive medication.
2. When the patent for the expensive medication expires, another drug manufacturer can develop a generic alternative that is equally safe, effective and cheaper for patients.
3. Through pay for delay, the brand-name manufacturer creates an incentive for the generic manufacturer not to go to market.
4. Pay for delay preserves monopoly prices and prevents consumer access to these generic alternatives.

Schemes like these drive up premiums and patient costs. Right now, 22 cents of every premium dollar goes toward prescription drugs.

Blue Cross Blue Shield Association (BCBSA) and BCBS companies are committed to bipartisan congressional solutions that take on big pharma’s pricing schemes and prohibit anti-competitive approaches that delay patient access to lower-cost, equally effective medicines.

We recently released our roadmap to reduce costs by $1 trillion and included a ban on pay for delay—which, according to a recent study by the Actuarial Research Corporation, would save $45 billion over 10 years for patients, consumers and taxpayers.

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Patent thickets: Gaming the patent system

Big pharma also uses “patent thicketing” to file multiple overlapping patents to existing brand drugs for the purpose of delaying generic competition and pocketing profits.

For example, the initial patent for a blockbuster drug approved in 2002 would have expired in 2016. Before that date, the manufacturer applied for—and obtained—over 75 patents, extending its monopoly to 2034. Because it faces no competition from safe, effective generic alternatives, many patients are unable to afford this drug.

Congress has recognized the impact this and other big pharma schemes have on the prices hardworking Americans pay for drugs and has introduced bipartisan legislation that puts consumers first. The Affordable Prescriptions for Patients Act is focused on preventing patent thickets while the Drug Competition Enhancement Act prohibits product hopping.

According to the Congressional Budget Office, limiting patent thicketing would have an estimated $1.8 billion savings impact over 10 years while ending product hopping would reduce federal spending and increase federal revenues by $1.1 billion over that same period of time. More importantly, both bills would help lower prescription drug costs for Americans by improving access to safe, affordable generic alternatives.

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