Bayer has agreed to pay a $74 million settlement in a case where Plaintiffs alleged the drug maker violated antitrust laws by participating in pay-for-delay activities surrounding its drug, Cipro.
A class-action lawsuit charged Bayer Corporation, along with Barr Laboratories and other generic drug companies, with cheating consumers by unfairly restricting the competition against its antibiotic prescription drug Ciprofloxacin (Cipro).
Big Pharma companies often pay the generic drug makers to keep them from offering access of their less-expensive, generic versions of drugs to consumers.
Just as the name implies, generic drug makers are paid to delay the introduction of their drugs, even after the patent on the more expensive brand-name drug has expired. This allows the manufacturer of the brand-name drug to continue to earn big profits, while consumers are forced to pay the higher price.
In the Bayer litigation, the drug manufacturer paid the generic drug companies close to $400 million between 1997 and 2003 in exchange for them agreeing not to introduce their own, less expensive generic version of Cipro into the marketplace.
A U.S. Supreme Court decision handed down recently says pay-to-delay arrangements may be a violation of antitrust laws. The Federal Trade Commission (FTC) has been contending for some time that pay-to-delay is “presumptively illegal.” The Supreme Court ruling attempts to make a distinction between antitrust laws, which state that a corporation cannot block a rival from competition in the marketplace, and patent laws, which protect a company’s product from copycat products.
New brand-name drugs to hit the market are protected from generic competition with a patent for 20 years. As long as the patent remains valid, the brand-name drug company can continue to earn profits on the drug. It is common for makers of generic drugs to challenge the validity of patents in order to get their copycat drugs on the market and earn a piece of the brand-name profits. In most cases, generics are considerably cheaper than brand-name drugs and obviously preferred by patients, as well as insurance companies.
The patent lawsuits fought by generic companies sometimes lead to the brand-name drug company offering to settle the lawsuits by paying the generic drug company to delay the launch of its copycat drug.
There are several examples of patent protection. Solvay Pharmaceuticals applied for a patent in 2000 for Androgel, a topical gel used to treat low testosterone levels. The patent protected the gel through 2020; however, the patent protection did not include the gel’s active ingredient, a synthetic testosterone. Watson Pharmaceuticals, a generic drug maker, announced it was developing a generic version of Androgel. Concerned that the generic drug would shave $125 million from its annual profits, Solvay offered Watson $19-30 million a year to delay introduction of its generic product until 2015. The FTC then sued Watson and Solvay, claiming that the settlement violated antitrust laws. A federal judge and the U.S. 11th Circuit Court of Appeals sided with the drug companies. The U.S. Supreme Court sided with the FTC by a 5-3 ruling.
While the recent Supreme Court ruling does not specifically ban pay-for-delay, it does provide a precedent that allows similar lawsuits to be filed on the basis of antitrust violations.
This time the Supreme Court sided with the consumer, making it more difficult for Big Pharma to increase their bank account at the expense of all of us.
It is one thing when the pharmaceutical companies cheat each other due to their greed. But when they deliberately prevent the launch of less expensive generics, it affects all of us. Many people cannot afford brand name medications. The cheaper generic versions would help so many patients, but due to the drug makers’ greed, we are the ones who pay the price.
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