You are hereHome >
Top Twenty Pay-for-Delay Drugs
Too often, consumers are forced to shoulder a heavy financial burden, or even go without needed medicine, due to the high cost of brand-name drugs. Our research indicates that one significant cause is the practice called “pay for delay,” which inflates the drug prices paid by tens of millions of Americans.
In a pay-for-delay deal, a brand-name drug company pays off a would-be competitor to delay it from selling a generic version of the drug. Without any competition, the brand-name company can continue demanding high prices for its drug.
This list of 20 drugs known to be impacted by pay-for-delay deals represents the tip of the iceberg. Annual reports by the Federal Trade Commission (FTC) indicate that generic versions of as many as 142 brand-name drugs have been delayed by pay-for-delay arrangements between drug manufacturers since 2005.
However, because the details of these deals rarely become public, consumers have largely been kept in the dark about the extent of the problem. Information about these twenty specific drugs affected by pay-for-delay deals has been made public thanks to legal challenges brought by the FTC, consumer class action lawsuits, research by legal experts, and public disclosures by drug makers.
Key findings of our analysis of these 20 drugs impacted by pay-for-delay deals:
- This practice has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease, to depression and bacterial infection.
- These payoffs have delayed generic drugs for five years, on average, and as long as nine years.
- These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more.
- Combined, these brand-name drug companies have made an estimated $98 billion in total sales of these drugs while the generic versions were delayed.
Impact of Pay for Delay on Consumers
While the specifics of pay for delay are only now beginning to be understood by the public, the consequences of this price-inflating practice are all too real for consumers and taxpayers.
The drug Provigil, prescribed for sleep disorders and multiple sclerosis-related fatigue, offers a case study: Experts expected a generic version of Provigil to go on the market in late 2005, but brand-name manufacturer Cephalon paid more than $200 million to four different generic drug manufacturers, who kept their generics off the market until 2012.2 In the meantime, many patients had to pay up to $1,200 each month for the drug, or manage without it.
In 2010, the FTC estimated that a pay-for-delay deal for a single drug could cost an individual consumer and their health plan an extra $4,590 over 17 months.3 Extended over the average five-year length of a pay-for-delay deal, that amounts to $16,200 in wasteful spending per patient, per drug, due to pay for delay.
This not only forces consumers to pay higher premiums and out-of-pocket costs, it also means that taxpayers foot higher drug bills in Medicare and other programs. The FTC estimated in 2010 that these deals cost consumers and taxpayers $3.5 billion each year in higher drug costs.
But for drug companies, pay-for-delay deals can translate to a windfall in higher profits. As the CEO of Cephalon, the drug company that makes Provigil, reportedly said about the deal that kept generic Provigil off the market, “That’s $4 billion in sales that no one expected.”
Our list of the Top Twenty Pay-for-Delay Drugs details 20 drugs impacted by one or more known pay-for-delay deals which include a payment by the brand-name drug company in exchange for an agreement by the generic drug maker to delay bringing a generic to market. As described above and detailed in the endnotes, information about these 20 specific drugs affected by pay-for-delay deals has been made public thanks to legal challenges brought by the FTC, consumer class action lawsuits, research by legal experts, and public disclosures by drug makers.
When computing the average difference between brand-name and generic drugs, we included only those drugs for which there was both a brand-name and generic price available. We did not include the estimated prices for the five generic drugs that are currently delayed.
To estimate the combined total sales of these 20 brand-name drugs while the generic versions were delayed, we conservatively assumed a 10% annual growth rate in drug sales revenue for brand-name drugs before the generic entered the market. Starting from the most recent available sales revenue before generic entry, we then estimated sales for the previous years. For instance, with annual sales for Adderall XR at $1.5 billion the year before generic entry, sales for the two previous years were estimated to be $1.364 billion and $1.239 billion, for a total of $4.103 billion. We did not project sales revenue forward for drugs currently protected by payfor-delay deals.
Defend the CFPB
Tell your senators to oppose the “Financial CHOICE Act,” which would gut Wall Street reforms and destroy the Consumer Financial Protection Bureau as we know it.
Your donation supports Iowa PIRG's work to stand up for consumers on the issues that matter, especially when powerful interests are blocking progress.