Supreme Court Ends Big Pharma’s Stranglehold on Generic Drugs

The United States Supreme Court ruled that “pay-for-delay” programs between larger, commercial drug companies and their generic competitors are illegal. The deals consisted of the Big Pharma companies paying off competing companies to withhold generic forms of brand-name drugs off the market.

The decision overturns previous lower-court “rulings that said the agreements were legal, provided that a deal did not keep a generic drug off the market beyond the term of the brand-name drug’s patent.” Before the Supreme Court’s ruling, patients, drug retailers, and insurance companies were paying higher prices for drugs because Big Pharma was keeping a lid on more affordable, generic medications.

The New York Times reported that generic drugs generally cost only “15 percent of the brand-name’s price and cause the original to quickly lose up to 90 percent of its market share.” Knowledge of this high dip in revenue prompted the Big Pharma companies to pay off smaller drug companies, asking them to not release cheaper, generic versions. Big Pharma ups the ante in greed by essentially purchasing shelves in pharmacies across the nation.

In 2011, there were $320 billion in drug sales in the United States, of which “brand-name drugs accounted for 18 percent of the total the written prescriptions written by doctors in 2011 but 73 percent of consumer spending.” Because the prices of brand-name drugs are so top-heavy, drug companies are able to reap huge profits by way of scalping a small amount of patients. Now, because of the ruling, the Federal Trade Commission (FTC) is able to file suit against Big Pharma companies that pay smaller companies to keep from releasing generic forms.

In the present case, the Court determined that payments made by Solvay Pharmaceuticals to Actavis “represented an unlawful restraint of trade because it was intended to keep Actavis from producing its generic version of AndroGel.” Solvay currently holds the patent for the testosterone drug AndroGel.

The decision is a huge win for consumers against Big Pharma committing violations that liken them to greedy monopolies, and certain officials have heralded it as such. FTC chairwoman Edith Ramirez said that “With this finding, the court has taken a big step toward addressing a problem that has cost Americans $3.5 billion a year in higher drug prices.”

With the current state of the American health care system, hospitals and insurance companies financially crippling millions of citizens, Ramirez and the Supreme Court could not have spoken more truly.

Joshua de Leon is a writer and researcher with Ring of Fire. 

About the Author

Joshua De Leon

Josh de Leon is a writer and researcher with Ring of Fire.

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