Drug Companies Conspire to Keep Prices High, Will Newsom Disrupt ‘Pay for Delay’?

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Source: The Sacramento Bee

It’s shocking how far pharmaceutical companies go to keep drug prices high.

Take, for example, a tactic known as “pay for delay.” It allows pharmaceutical companies to keep cheaper generic versions of their drugs off of the market. This works great for big pharmaceutical corporations, which can cut fat checks to stave off their competition for a while. It’s also a fine deal for generic drug companies, which can reap millions by simply delaying their products’ entry into the market.

But greedy corporate maneuvers like these hurt people like Cynthia Stockton, 73, a retired Sacramento woman struggling to pay for the medicines she needs to survive.

“I have seizure disorder, I have a brain tumor and I’m a paraplegic,” said Stockton. “I have a lot of meds that I have to take – I don’t have a choice – and I was paying out the nose for them.”

When Stockton learned that pharmaceutical companies work to keep cheaper generic drugs off the market, she channeled her outrage into activism. She became a vocal supporter of Assembly Bill 824, which would make it harder for pharmaceutical corporations to get away with unscrupulous and anti-competitive tactics like pay for delay. The bill currently awaits Gov. Gavin Newsom’s signature.

“They just pay the companies off and keep these big-dollar prescriptions going so that generics are not made available,” she said. “And that made me mad because it’s like mafia control … so I started speaking up.”

Research by consumer advocacy groups has found that pay-for-delay agreements cut off consumer access to generic versions of drugs, including those used to treat life-threatening conditions like cancer, heart disease, depression and bacterial infection. This means higher prices for life-saving medicines.

“These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more,” according to a 2013 report by CalPIRG and Community Catalyst.

Gov. Newsom can make it harder for drug companies to hurt Californians with this outrageous tactic by signing AB 824. The bill, authored by Democratic Assemblyman Jim Wood of Healdsburg, would give California’s attorney general an extra tool to help protect consumers from pay-for-delay tactics.

The bill “would force drug companies to prove they aren’t engaging in anti-competitive behavior when they strike deals with companies that produce generic drugs,” according to a story by The Sacramento Bee’s Sophia Bollag.

“By changing the burden of proof on this a little bit, it gives the AG a chance to say ‘if this is good for consumers, prove it to us,’” said Wood, adding that he introduced the legislation after California Attorney General Xavier Becerra asked him to do so. “This will change the playing field significantly.”

Wood said the bill’s opponents – brand-name pharmaceutical companies and generic drug-makers – argued that the pay-for-delay deals actually help consumers. When Wood directly challenged them to provide an example, however, he said they were unable to do so.

“Nobody has been able to give me an example of how this has been good for consumers or helped a drug get to market faster,” said Wood.

In an interview with The Bee, Attorney General Becerra said his interest in the issue dates back to his time in Congress and his work on the Affordable Care Act.

“Americans are being ripped off when it comes to prescription drug prices,” he said.

As attorney general, he has sued multiple pharmaceutical companies on behalf of California consumers. In July, his office won nearly $70 million in settlements from three companies to settle claims that they had engaged in illegal practices to delay generics from entering the market.

Becerra said that AB 824 is not a perfect solution because pharmaceutical companies won last-minute changes to weaken it.

“The pharmaceutical industry is very powerful and they’ve got lots of friends,” he said. “Even in this legislation, they were able to strip critical provisions from the bill.”

However, he said the bill is an important first step toward giving his office the tools it needs to crack down on anti-competitive price tactics that cost American consumers billions of dollars.

“It’s not everything. We still have to do more,” he said. “But you take this one step at a time. We’re talking billions of dollars every year that Californians are paying for pharmaceuticals beyond what they should.”

“If there were more transparency there would be less of this backroom collusion that keeps prices high,” he said.

With AB 824, Gov. Newsom has a chance to make California a national leader in reining in the greedy tactics of Big Pharma. We urge him to sign the bill.

If he doesn’t, he will be hearing from seniors like Stockton, who are the primary victims of the drug industry’s pricing schemes.

“I’d like to tell him off if he decided not to sign it,” said Stockton. “I’d tell him off in a minute. Politely … politically correct, of course … but I’ll tell him exactly what I think.”

Last Updated 05/27/2020

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