Business As Usual: Big Pharma Pays Off Generic Makers Not to Compete

From Reuters:

http://www.reuters.com/article/marketsNews/idUSN2328640520080523

...Comes word that the FTC has noted 14 instances last year in which a brand-name drug firm has entered into a financial deal with a generic maker to delay the entry of a new generic equivalent drug into the market, effectively extending the brand-name drug's patent protection (and monopoly ability to keep charging high prices) by many months.

This "evergreening" strategy as discussed in HOOKED is a violation of FTC policies, according to the views of that agency; but pro-corporate judges in the Federal courts have periodically been willing to allow these deals, so apparently all the FTC can do now is report these and say "tsk, tsk."

Now, I am no judge and no economist, and I don't have an MBA degree. But it seems contrary to public policy when a big drug firm can pay off a generic firm not to sell a cheaper generic drug, and the consumer ends up having to pay the higher brand-name prices. Sounds somehow anti-competitive to me. But to the Federal courts it's simply business as usual.

Lest you think that making side deals with generic makers and paying them off not to compete with you, is the only way to "evergreen" a brand-name drug about to go off patent, I'm informed by the latest issue of The Medical Letter that Wyeth has received FDA approval for its new antidepressant, desvenlafaxine (Pristiq). Wyeth's antidepressant venlafaxine (Effexor) is now available generically for the immediate-release form, and the extended-release form is going off patent in 2010. What is the "new" drug? It's the active metabolite of the old drug--that is, the substance that your body naturally changes the old drug into as soon as you absorb it. In other words, the same drug, but it's chemically slightly modified so they get to patent it and sell it at brand name prices just as if it were a real breakthrough. The only good news is that the announced price so far for the "new" drug is not that much higher than for the generic "old" drug. This is just one in a line of "new" drugs that are produced merely by a small tweak in the molecule of an "old" drug, the transformation of the "old purple pill" Prilosec into the "new purple pill" Nexium being the best known case. I am always atruck by the coincidence that the company's scientists find a way to "improve" the old drug just about the time it's ready to go off patent. Somehow that improvement never occurs to them when the drug still has a lot of years of patent life yet to run.