Rx Companies' Tactics Slow Competitors

by Athena Godet-Calogeras

“A rose by any other name smells as sweet,” exclaimed Romeo in Shakespeare’s Romeo and Juliet.

So true, and many of us have repeated that familiar phrase when arguing words or positions. Shakespeare’s words also ring true when we compare a brand name drug with its generic equivalent.

Generic drugs are exact copies of brand-name counterparts: same intended use, same dosage, same method of administration, same risks, same strength, and same safety. A major difference for the consumer is that they cost a lot less, some 80 – 85 percent less than the brand-name drug.  According to the National Association of Chain Drug Stores, the average price of a brand-name drug in 2008 was $237.50; a generic equivalent was $36.22.

Why, then, haven’t the generics taken over the market, and saved all of us a great deal of money? Because the generic companies are slowed or stymied by pharmaceutical companies producing those often exorbitantly priced name-brand drugs.

When into the development stage of a new drug, a pharmaceutical manufacturer gets a patent from the government, thereby establishing monopoly rights on that drug for several years, during which time they can not only recoup expenses but also accumulate profits.

When a generic company attempts to initiate a copy of that drug, the brand-name company sues for patent infringement — and the FDA issues an automatic 30-month stay on the generic company, without investigation of whether or not the claim is legitimate. During those 30 months, profits continue to pile up for the patented company.

There are other tactics the drug company uses to ensure its monopoly. A drug company can pay the threatening generic company to delay development of their copy. According to the Federal Trade Commission (FTC), the consumer protection agency, these kinds of deals cost consumers and taxpayers $3.5 billion in high drug costs yearly. The drug company can also reformulate the particular drug in danger of generic copy with, for example, a simplified dosage or extended release. It can offer new means of administering the drug, come up with new uses, or put together new combinations. It’s a type of chess game that’s played between pharmaceutical manufacturers: move and counter-move. All of these methods can extend the company’s patent. The goal for the company facing intrusion of a generic player is the same: maintain monopoly as long as possible to keep the set price in place and maximize profits. Incidentally, in the U.S., drug manufacturers set their own prices, which is not the norm anywhere else in the world.

What can we do to safeguard our pocketbook — and our health? In the short-term, we can educate ourselves further on the issue and request a generic equivalent of a particular drug from our physician if it’s available. In the longer-term, we can advocate for a reduction of the scope and length of monopolies given to pharmaceutical companies.

After all, if a rose by any other name smells as sweet, let’s develop the cost-effective varieties!

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