Innovation Asset Blog

Research confirms consumer impact of pay-for-delay patent strategy

The threats posed by pay-for-delay patent strategies were thrust into the spotlight last month as the U.S. Federal Trade Commission authorized antitrust investigators to more closely examine these controversial business practices. A new study released by two nonprofit public interest groups is now adding depth to the conversation, presenting objective evidence for the financial burden brand name drug manufacturers are imposing on consumers.

Jointly published by MASSPIRG and Community Catalyst, the report analyzed the extended impact pay-for-delay deals had on 20 prescription drugs designed to treat ailments ranging from high cholesterol and blood clots to anxiety and sleep disorders. On average, the market availability of generic equivalents was delayed by five years. During these delays, consumers were asked to pay brand name drug prices that were 10 times higher than their eventual generic alternative listings.

In the case of Effexor XR, a prescription treating major depressive, anxiety and panic disorders, generic counterparts were delayed by 4.7 years. Patients were asked to pay $194 per prescription during that time, with several likely incurring out-of-pocket costs or discontinuing treatment as a result. However, that figure dropped to just $17 once generic alternatives hit the market.

Researchers were quick to note that the 20 drugs studied were only a small subset of a larger issue, as 142 pay-for-delay agreements have been authored by pharmaceutical companies since 2005. According to Boston Business Journal, two U.S. Senate bills are currently being floated as long-term solutions to this discouraging problem. One posits that all such pay-for-delay deals should be presumed illegal and culpable to immediate FTC sanctions. The second would allow other generic drugmakers to enter the marketplace even if one of their counterparts decided to partner with the brand name manufacturer in a reverse payment agreement.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.