Pay-For-Delay Agreements Again Show How Pharma Abuses Patent Law To Harm Us All
from the this-helps-who-exactly? dept
We've discussed in the past how pharmaceutical patents actually tend to slow down the development of better healthcare solutions, and earlier this year, we mentioned how the EU was growing increasingly concerned about how patent holders were abusing their patents to try to prevent generic competitors from entering the market. Recently, US FTC officials have noticed the same thing and are trying to do something about it -- but are facing tremendous (well organized and well financed) pushback from pharmaceutical lobbyists (the kind who are able to get more than 40 Congressional reps, on both sides of the aisle, to repeat talking points into the Congressional record with no shame).At issue is the fact that the big pharma firms are paying off generic drug makers to keep them from entering the market -- which in any other market would be a clear anti-competitive activity. How do patents fit into the equation? Well, the big pharma companies are suing the generics for patent infringement, but know they don't have any legal leg to stand on. The filing of the lawsuit is basically just a negotiating ploy, bringing the generic manufacturer to the table. If there were actual infringement, then the generic maker could be barred or would have to pay up. Instead, the money flows the other way. The two parties settle in a "pay for delay" pact, whereby the patent holder pays off the generic maker to stay out of the market, even if there's no real infringement. This basically grants the patent holder extra monopoly time on a drug, which can be worth billions, but makes drugs significantly more expensive for everyone.
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Filed Under: generics, patents, pay for delay, pharma
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Isn't that illegal or something?
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Re: Isn't that illegal or something?
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Basic business principal: If I can be paid more than the profits I would make to NOT make something, I know what my business decision would be.
It's sort of like the "shut us up" option on CwF thing. Basically, you named a price many times higher than your profits (or even net worth) and if someone actually paid it, you would shut up. The same concept is alive here. The generic company gets way more than the profit they would have made, which in the end is good business, because they can just enter the market next year, without interrupting their current production of other generics in their factories.
Is it a little shady? Yup, but remarkably it doesn't appear to be illegal either.
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And you are a lawyer?
http://en.wikipedia.org/wiki/Competition_law
http://en.wikipedia.org/wiki/Sherman_Antitr ust_Act
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If they just walked up to a generic company and wanted to buy them off, lets say it would cost $10 million.
Now if they sue first they can say 'it will cost you $2 million to defend in court, plus delay the product for six months anyway ($5 million worth), or we can just pay you $3 million to sit around for a year'.
Of course all fictional numbers, but you get the idea.
What I don't understand is why some other generic company wouldn't just pick up the slack.
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Precedence
Humor: Japanese car companies, particularly Toyota, did the same thing in South Korea. They paid Korean companies to stay out of the market for ten years while making cars for the Japanese companies.
What did patents have to do with this? Ummm...ABSOLUTELY NOTHING.
Did this delay slow down the "development of better" automotive technology or cars? Actually, no. In that case the Korean companies benefited by the transfer of technology during that ten years.
Sometimes pay-for-delay is a great benefit.
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Re: Precedence
We get it, you don't like Mike accusing anyone of creating moral panics or moral outrage. Wasn't a week of such BS enough?
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What is funny to me is that the technique used is very similar to people infringing on copyright every day. Basically, they make it outrageously expensive for the copyright holders to take them to court, to win a judgement that can never be satisfied. So the copyright holders are suppose to "embrace sharing" rather than be able to use their rights.
Sometimes Techdirt is like reading the Onion, some of the humor isn't intentional, but it is there.
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Re: Re: Re: Precedence
What is more interesting is his last comment that I did not "like" Mike accusing someone of creating moral panics or outrage. Actually, I was unaware of Mike doing any such thing. Given the pervasity of the infamous "Streisand Effect," one would think that Dementia was trying to draw attention to the moral outrage in Mike's post. Way to prove a point Dementia!
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Re: Re: Re: Precedence
Well this is a blog where Mike gives his opinions on various news stories. This is a fact that he doesn't try and hide. You are free to create a blog and post whatever opinions you have on basically any topic you care to post about.
"What is funny to me is that the technique used is very similar to people infringing on copyright every day."
Wait, what? So, are the infringers suing the copyright holders now? If true, that would be very funny.
"Basically, they make it outrageously expensive for the copyright holders to take them to court, to win a judgement that can never be satisfied."
Again, the copyright holders are the ones sending out infringement notifications and threatening to sue. They are also the ones (in most every case) that have the resources to financially bury anyone they accuse of file sharing.
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yes, they have the money to sue, but they also have to play whack a mole to do it. Infringers know that they are just one of many moles, and play the game knowing they will likely never get whacked. With enough moles, it is almost impossible to whack them all. It's the method used to undermine the copyright system, basically like gang shoplifting. If enough people are shoplifting at the same time, it is likely the store detectives won't get most of you.
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This is the equivalent of threatening financial ruin on a person to force them to sell you their house. Even if you buy the house at an inflated price, the fact that you got them to the closing with a threat is both ethically questionable and likely illegal (I'm no lawyer).
And I am sure that if you look at the resulting deals, the big pharma companies are making out better.
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Re: Precedence
It seems you're the one that's SCREAMING HERE.
Kinda hypocritical to try to point to someone else's outrage.
Yours is an immoral outrage.
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Re: Re: Precedence
As for "immoral" outrage," I would love to hear a definition of that. You are merely trolling and trying to divert a conversation.
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Re: Re: Re: Precedence
You're obviously trolling immorally trying to apply conversation to a diversion.
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Generic company executives are not stupid and even selling generics, have quite a bit of money.
Who is in the drivers seat, Pfizer or the company that has exclusive rights to Lipitor soon? Guess what, it ain't Pfizer.
Want to save money on drugs? Get rid of the 6 month monopoly that the generic company has on selling a recent drug that goes off patent. When Prozac went off patent, the company that had that monopoly sold Prozac for exactly $2 less a perscription than Lilly did. Lilly's sales dropped 90% within those 6 months all for a grand savings of $2 bucks.
Of course, without that monopoly, there would be very few generic companies around, but hey, if it works for patents.....
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My next profitable business
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Pharma
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Big pharma is a business.
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Re: Big pharma is a business.
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Re: Re: Big pharma is a business.
However, a lot of older doctors, or doctors who have not updated their knowledge on the subject, still work under the old mindset of resisting the diagnosis of celiac. They try all sorts of other things first. To be fair though, IBS is a lot more common than celiacs, and it does make sense to rule that out. Still, with the simplicity of a current celiac tests, it should be tested with less resistance.
What I am saying is that I don't think undiagnosed celiac should be attributed to drug pushing as much as the slowness with which many doctors accept new ideas and findings.
"And it's not *just* congress that they're paying off....They often pay off doctors to push their drugs even though there are better treatments available."
This has actually tapered off quite a bit. The kind of extreme perks they used to offer to doctors have been dialed down by federal and state regulations (in the US at least).
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Evergreening.
Big pharma makes me sick. This statement probably is literal.
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Pharma (big or small) in the driver's seat
If the generics are making good money accepting pay-for -delay, it would appear that the patent suit is simply a trick used to avoid anti-competition suits from other big or small Pharma competitors.
I realise that many people have a real need for the products these companies produce, but we if we keep running to the medicine cabinet for every little ache and pain, we put Pharma in the driver's seat.
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yeah...
All patents and copyrights are for the benefit of the people. As soon as a patent or copyright ceases to benefit the general public it no longer is serving its purpose and should be revoked.
Many studies have shown that the more likely someone is to pirate a copyrighted material, the more likely the are to purchase that item. Another recent study has shown the current model of copyright works BEST when 30% of people create ad 70% of people copy
Either way, copying will ALWAYS be around and society works best when there is at least some copying, not sure about 70% though.
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The best selling drugs on the market are:
Most of these are not for "every little ache and pain." As a matter of fact, none of the drugs on this list is intended to be prescribed for acute symptoms, but rather as a form of long term drug therapy.
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Re: long term drug therapy
Diet and exercise are key.
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Re: Re: long term drug therapy
for those other things, a short term 'get out of immediate danger' type drug isn't a bad idea, i think... but the long term solution really should be diet and exercise. people just suck at sticking to such a program when unhealthy food is cheaper/easier to get, and their jobs don't include said exercise. [paying to exercise just feels like getting shafted twice, for one thing...]
none of the above in any way excuses pharmaceutical company's behavior, mind you.
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Why...
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So, no, it's not the free market at work. It is an unethical and possibly illegal business practice that hinders the free market.
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Illegal As Defined, Not If Good Faith & Reasonable
So, if we take the initial comment as presuming frivolity, then there's no analytical problem, is there? It's illegal. So the DOJ and FTC and competitors have a case.
See In re Cardizem CD Antitrust Litigation (Louisiana Wholesale Drug Co. v. Hoechst Marion Roussel, Inc., and Andrx Pharmaceuticals, Inc.) 332 F.3d 896 (6th Cir 2003) Schering-Plough Corp. v. F.T.C. 402 F.3d 1056 (11th Cir 2005) In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (C.A. Fed., Oct. 15, 2008) In re Tamoxifen Citrate Antitrust Litigation, 429 F.3d 370, 77 USPQ2d 1705 (2d Cir. 2005)
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