Copyright 2000 The New York Times Company
The New
York Times
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July 26, 2000, Wednesday, Late Edition -
Final
SECTION: Section A; Page 22; Column
1; Editorial Desk
LENGTH: 481 words
HEADLINE: Driving Up Drug Prices
BODY:
Two recent antitrust actions by the Federal
Trade Commission and a related federal court decision have exposed the way some
pharmaceutical companies conspire to keep low-priced drugs out of reach of
consumers. Manufacturers of patented drugs are paying tens of millions of
dollars to manufacturers of generic drugs if they agree to keep products off the
market. The drug companies split the profits from maintaining a monopoly at the
consumer's expense. The commission is taking aggressive action to curb the
practice. It needs help from Congress to close loopholes in federal law.
Dissatisfied with the supply of generic drugs, Congress passed the
Hatch-Waxman act in 1984 to encourage manufacturers to
challenge weak or invalid patents on brand-name drugs. The act grants temporary
protection from competition to the first manufacturer that receives permission
from federal authorities to sell a generic drug before the patent on a
brand-name drug expires. For 180 days, the federal government promises to
approve no other generic drug.
But as reported Sunday by Sheryl Gay
Stolberg and Jeff Gerth of The Times, drug companies are undermining Congress's
intent. Hoechst Marion Roussel, the maker of drugs to treat hypertension and
angina, agreed in 1997 to pay Andrx Pharmaceuticals to delay bringing its
generic alternative to market. The commission brought charges against the
companies last March and a federal judge declared last month in a private
lawsuit that the agreement violated antitrust laws.
In a second case,
Abbott Laboratories paid Geneva Pharmaceuticals to delay selling a generic
alternative to an Abbott drug that treats hypertension and enlarged prostates.
Geneva's drug could have cost Abbott over $30 million a month in sales. In both
cases, the manufacturer of the generic drug used its claim to the 180-day grace
period to block other generic drugs from entering the market.
The drug
companies deny that their agreements violate the antitrust laws, presenting them
as private preliminary settlements between companies engaged in patent disputes.
That is untenable. The agreements are overly broad, temporarily stopping all
sales of generic drugs. Typically in settlement of a patent dispute, the company
infringing on the patent would pay the patent holder. In these cases it is
reversed, stunting competition. The agreements are also private, going into
effect before a court reviews the public interest.
Not all private
settlements are anti-consumer. That is why the commission has taken a careful
case-by-case approach. It could use a little help from Congress. The 180-day
grace period was designed to encourage generics to enter the market. Since it is
being manipulated to impede competition, the grace period needs to be fixed so
that the production of generic drugs cannot be blocked by a single company that
decides not to compete.
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LOAD-DATE: July 26, 2000 
