Rx Legislation: How to Stop Generic Drug Monopolies

Author: Sarah Riordan

Apparently, there’s a problem in the drug world.  If you’re thinking gang banging, traffic carting, gun toting drug dealer, you’re thinking of the wrong kind of drugs. The drugs in question are the legal ones that often provide life-saving medications to Americans everywhere.

So what seedy activities are occurring in this immensely profitable financial market?  Well, I’ll give you a hint; it has to do with mass amounts of money, competitors and payoffs.

Because “name-brand” drug companies put all the legwork into providing medication, (legwork equals research, testing, and initial distribution) they automatically get a twenty-year exclusive patent on new products.  This permits the company to recoup some of it research and development cost and make some profit on the product.  It also seems perfectly fair and provides the necessary incentive for companies to continue bringing new products to market. 

After twenty years however, the patent runs out, and generic drug companies have a chance at making a profit by selling the same drug at a much cheaper rate.  So much cheaper in fact, that generic drugs cost consumers up to 80 percent less than their name-brand competitors. 

With the current system in place, every body gets a chance to play without unduly burdening the name-brand drugs original manufacturer.  So everyone should be happy right?

Well, judging by what we know of human nature, no one is ever completely satisfied.  As a result, brand-name companies have, according to the bill, decided that twenty years and billions of dollars isn’t quite enough time to make money.  To protect their profits, drug companies have come up with some “creative financing” to get around the problem of the limited patents.  And when you have millions of dollars at your disposal, it can become a very effective tool to protect your interests.  Consequently, according to the Federal Trade Commission, the owner of the name -brand drugs have been paying other companies not to enter the market. 

So, say you’ve been taking the allergy medicine Zyrtec for twenty years.  (Zyrtec is already provided over the counter in generic form, so this example is purely an illustration.  I am in no way implying that this is Pfizer’s practice.)  Soon that drug will become available in a much cheaper form.  Pfizer sees this, and decides to pay the generic company an amount equal to that of the profit they would make off of the generic form of Zyrtec.  Therefore, Pfizer protects its monopoly on Zyrtec and continues charging consumers 80 percent more than the drug is actually worth. 

That’s why Senator Herbert Kohl, a Democrat from Wisconsin, decided to sponsor S.369. The bill basically makes it illegal for the big companies to skirt around their twenty-year patent by buying off their competitors. 

No one is trying to limit a company’s abilities to make profit off of their products.  Exclusive rights for twenty years is a long time and most companies recoup their R&D cost and then some in that time.  The bill is simply trying to make sure the game is played fair and the consumer is given choices to help reduce drug cost. 

As a bill that doesn’t increase taxes, the simple response is simply, “Why not?”  With all of the Americans who need prescriptions, and the ridiculous price of prescription drugs, giving the “name-brandys” a monopoly would make the problem drastically worse. 

So by all means, keep those drug companies honest, and keep Americans healthy!