Skip to main content

How Big Pharma rips you off on drugs

By Arthur Caplan and Zachary Caplan, Special to CNN
April 25, 2013 -- Updated 1312 GMT (2112 HKT)
Arthur and Zachary Caplan say brand-name Lipitor sold for $3.50 or more per pill.
Arthur and Zachary Caplan say brand-name Lipitor sold for $3.50 or more per pill.
STORY HIGHLIGHTS
  • The Supreme Court probably will decide in June on Federal Trade Commission v. Actavis
  • Arthur Caplan, Zachary Caplan: Big Pharma has kept prescription drug prices high
  • Caplans: The court's decision will affect our escalating national health care bill for drugs
  • They say the Supreme Court should end pay-for-delay and encourage market competition

Editor's note: Arthur Caplan is the Drs. William F and Virginia Connolly Mitty professor and director of the Division of Bioethics at New York University's Langone Medical Center. Zachary Caplan is his son and an attorney at a law firm in Philadelphia that filed an amicus brief on behalf of drug wholesalers and pharmacies in the case FTC v. Actavis.

(CNN) -- Whether you are young or old, man or woman, very healthy or quite sick, it is almost a certainty that you are going to use a prescription drug in the next year or two. These medicines are crucial for preventing diseases and treating all sorts of ailments and problems.

They are also expensive -- really expensive. For example, the best-selling drug of all time, Pfizer's cholesterol lowering drug Lipitor, went for $3.50 per pill and up before going generic in late 2011. But these days some retail chains are giving away generic Lipitor while the rest are charging barely 50 cents a pill.

Prescription drugs cost Americans far more than they do people living in many other parts of the world. This is because drug companies spend a fortune on direct-to-consumer sales and marketing (which they don't do in other countries) and because other nations negotiate better deals for drugs than private insurers do in the United States.

Arthur Caplan
Arthur Caplan

Is there anything that can be done to lower costs and increase the availability of more affordable and equally effective drugs? Yes.

Zachary Caplan
Zachary Caplan

Earlier this year, the U.S. Supreme Court heard arguments in a case that drew little attention in the media: Federal Trade Commission v. Actavis. The stakes are high.

When the court decides this case, probably in June, it will either reinforce Big Pharma shenanigans that have helped keep prices high and skyrocketing, or finally bring some relief to our pocketbook and escalating national health care bill for drugs.

The issue is whether companies that own patents for prescription drugs can pay other companies that want to make cheaper generic versions not to do so, a practice known as pay-for-delay.

One way to get lower prices on drugs is to get generic versions out to replace name-brand drugs. Generic drugs include the exact same active ingredients as the brand names. The difference is the name of the medication and the color or shape of the pill.

Become a fan of CNNOpinion
Stay up to date on the latest opinion, analysis and conversations through social media. Join us at Facebook/CNNOpinion and follow us @CNNOpinion on Twitter. We welcome your ideas and comments.



Prescription drug manufacturers, fearing the arrival of cheaper generics and knowing or worrying that their patents alone won't keep out competitors, try to buy off the competition instead.

In the case before the court, Solvay Pharmaceuticals is accused of paying off would-be generic manufacturers of their blockbuster drug AndroGel, a synthetic testosterone used by hundreds of thousands of AIDS patients, cancer patients, elderly men and others who suffer from low levels of testosterone. The generic companies were happy; they made money for doing nothing. Solvay continued to reap huge profits by keeping its monopoly in the market. The only losers were patients who have had to keep paying much higher prices for their name-brand-only drug.

Usually, buying off your competitors is clearly illegal. Pay-for-delay deals run counter to basic antitrust principles. Nonetheless, some lower courts, declining to evaluate the strength of a patent, have let Big Pharma get away with these deals.

Big Pharma views the settlements as a bargain. Instead of losing up to 90% of their market share bcause of the introduction of a generic, companies can simply pay generic manufacturers and make the competition go away.

A 1984 law, the Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act, was intended to speed up lower-cost generic competition. Big Pharma has managed to completely undermine Hatch-Waxman's intent, which was to put in place mechanisms that encouraged generic drug makers to challenge the weak patents often used to protect brand-name drugs.

Unfortunately, the AndroGel case is not unique. In recent years, deals between Big Pharma and generic drug makers have delayed the introduction of a diverse range of cheaper generics including cancer drugs, AIDS treatments, blood pressure medications, antidepressants, allergy medications, sleep aids, ADD medications and more.

The Congressional Budget Office says pay-for-delay tactics cost consumers billions of dollars and the Federal Trade Commission estimates these pay-for-delay deals will cost Americans up to $35 billion over the next 10 years.

Rep. Henry Waxman, D-California, who co-wrote the Hatch-Waxman Act, has been very vocal in arguing that a law Congress intended to help reduce the cost of prescription medicines has been hijacked by the drug industry to do the opposite.

What we have now are the generic manufacturers and Big Pharma making a fortune by agreeing to delay competition that would bring lower priced drugs to market.

A few weeks ago, the Indian Supreme Court took a hard look at the way big drug companies were using patent extensions to keep out low price competition. They said forget it—that sort of tomfoolery will not be allowed.

The U.S. Supreme Court would be wise to concur, heed the Federal Trade Commission's complaint and bring pay-for-delay to an abrupt end.

The right prescription for making medicines cheaper and better is to encourage competition, not stifle it with backroom deals where everyone gets a great deal except for the patients.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Arthur Caplan and Zachary Caplan.

ADVERTISEMENT
Part of complete coverage on
July 24, 2014 -- Updated 1349 GMT (2149 HKT)
Patrick Cronin and Kelley Sayler say the world is seeing nonstate groups such as Ukraine's rebels wielding more power to do harm than ever before
July 23, 2014 -- Updated 2205 GMT (0605 HKT)
Ukraine ambassador Olexander Motsyk places blame for the MH17 tragedy squarely at the door of Russia
July 24, 2014 -- Updated 1142 GMT (1942 HKT)
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
July 24, 2014 -- Updated 1853 GMT (0253 HKT)
Les Abend says, with rockets flying over Tel Aviv and missiles shooting down MH17 over Ukraine, a commercial pilot's pre-flight checklist just got much more complicated
July 24, 2014 -- Updated 1317 GMT (2117 HKT)
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
July 24, 2014 -- Updated 1637 GMT (0037 HKT)
Gerard Jacobs says grieving families and nations need the comfort of traditional rituals to honor the remains of loved ones, particularly in a mass disaster
July 24, 2014 -- Updated 1413 GMT (2213 HKT)
The idea is difficult to stomach, but John Sutter writes that eating dog is morally equivalent to eating pig, another intelligent animal. If Americans oppose it, they should question their own eating habits as well.
July 23, 2014 -- Updated 1630 GMT (0030 HKT)
Bill van Esveld says under the laws of war, civilians who do not join in the fight are always to be protected. An International Criminal Court could rule on whether Israeli airstrikes and Hamas rocketing are war crimes.
July 23, 2014 -- Updated 1205 GMT (2005 HKT)
LZ Granderson says Ronald Reagan went horseback riding and took a vacation after the Korean Air Crash of 1983. So why does the GOP keep airbrushing history to bash Obama?
July 23, 2014 -- Updated 1338 GMT (2138 HKT)
Aaron Miller says Kerry needs the cooperation of Hamas, Israel, Egypt and others if he is to succeed in his peacemaking efforts
July 23, 2014 -- Updated 1251 GMT (2051 HKT)
Errol Louis says the tragic death of Eric Garner at the hands of the NYPD has its roots in the "broken windows" police strategy from the crime-ridden '80s.
July 23, 2014 -- Updated 1408 GMT (2208 HKT)
Gordon Brown says the kidnapped Nigerian girls have been in captivity for 100 days, but the world has not forgotten them.
July 23, 2014 -- Updated 1127 GMT (1927 HKT)
Ruben Navarrette says Texas Gov. Rick Perry is right to immediately send 1,000 National Guard troops to the U.S.-Mexico border in response to the border children crisis.
July 22, 2014 -- Updated 1356 GMT (2156 HKT)
Ukraine's president says the downing of MH17 was a terrorist act, but Richard Barrett says it would be considered terrorism only if it was intentional
July 22, 2014 -- Updated 2015 GMT (0415 HKT)
Robert McIntyre says the loophole that lets firms avoid taxes should be closed
July 22, 2014 -- Updated 1535 GMT (2335 HKT)
Jeronimo Saldana and Malik Burnett say Gov. Perry's plan to send National Guard to the border won't solve the escalating immigration problem.
July 22, 2014 -- Updated 1742 GMT (0142 HKT)
Sally Kohn: The world's fish and waters are polluted and under threat. Be very careful what fish you eat
July 22, 2014 -- Updated 1242 GMT (2042 HKT)
Les Abend says threat information that pilots respond to is only as good as the intelligence from air traffic controllers. And none of it is a match for a radar-guided missile
July 21, 2014 -- Updated 1235 GMT (2035 HKT)
Frida Ghitis: Anger over MH17 is growing against pro-Russia separatists. It's time for the Dutch government to lead, she writes
July 21, 2014 -- Updated 1227 GMT (2027 HKT)
Julian Zelizer says President Obama called inequality the "defining challenge" of our time but hasn't followed through.
July 21, 2014 -- Updated 1157 GMT (1957 HKT)
Gene Seymour says the 'Rockford Files' actor worked the persona of the principled coward, charming audiences on big and small screen for generations
July 21, 2014 -- Updated 1417 GMT (2217 HKT)
Daniel Treisman says that when the Russian leader tied his fate to the Ukraine separatists, he set the stage for his current risky predicament
July 18, 2014 -- Updated 1642 GMT (0042 HKT)
Andrew Kuchins says urgent diplomacy -- not sanctions -- is needed to de-escalate the conflict in Ukraine that helped lead to the downing of an airliner there.
July 19, 2014 -- Updated 0150 GMT (0950 HKT)
Jim Hall and Peter Goelz say there should be an immediate and thorough investigation into what happened to MH17.
July 18, 2014 -- Updated 1507 GMT (2307 HKT)
Pilot Bill Palmer says main defense commercial jets have against missiles is to avoid flying over conflict areas.
July 20, 2014 -- Updated 1755 GMT (0155 HKT)
Valerie Jarrett says that working women should not be discriminated against because they are pregnant.
July 21, 2014 -- Updated 1953 GMT (0353 HKT)
David Wheeler says the next time you get a difficult customer representative, think about recording the call.
July 18, 2014 -- Updated 1933 GMT (0333 HKT)
Newt Gingrich says the more dangerous the world becomes the more Obama hides in a fantasy world.
July 18, 2014 -- Updated 1011 GMT (1811 HKT)
Michael Desch: It's hard to see why anyone, including Russia and its local allies, would have intentionally targeted the Malaysian Airlines flight
July 17, 2014 -- Updated 1914 GMT (0314 HKT)
LZ Granderson says we must remember our visceral horror at the news of children killed in an airstrike on a Gaza beach next time our politicians talk of war
July 17, 2014 -- Updated 1206 GMT (2006 HKT)
Sally Kohn says now the House GOP wants to sue Obama for not implementing a law fast enough, a law they voted down 50 times, all reason has left the room.
July 17, 2014 -- Updated 1214 GMT (2014 HKT)
A street sign for Wall Street
Sens. Elizabeth Warren, John McCain and others want to scale back the "too big to fail" banks that put us at risk of another financial collapse.
July 17, 2014 -- Updated 2016 GMT (0416 HKT)
Newt Gingrich writes an open letter to Robert McDonald, the nominee to head the Veterans Administration.
July 18, 2014 -- Updated 1601 GMT (0001 HKT)
Paul Begala says Dick Cheney has caused an inordinate amount of damage yet continues in a relentless effort to revise the history of his failures.
July 18, 2014 -- Updated 1404 GMT (2204 HKT)
Kids who takes cell phones to bed are not sleeping, says Mel Robbins. Make them park their phones with the parents at night.
July 25, 2014 -- Updated 1237 GMT (2037 HKT)
Buzz Aldrin looked at planet Earth as he stood on talcum-like lunar dust 45 years ago. He thinks the next frontier should be Mars.
July 16, 2014 -- Updated 1804 GMT (0204 HKT)
Mark Zeller never thought my Afghan translator would save his life by killing two Taliban fighters who were about to kill him. The Taliban retaliated by placing him on the top of its kill list.
July 17, 2014 -- Updated 1518 GMT (2318 HKT)
Jeff Yang says an all-white cast of Asian characters in cartoonish costumes is racially offensive.
July 17, 2014 -- Updated 0124 GMT (0924 HKT)
Gary Ginsberg says the late John F. Kennedy Jr.'s reaction to an event in 1995 summed up his character
July 16, 2014 -- Updated 1641 GMT (0041 HKT)
Meg Urry says most falling space debris lands on the planet harmlessly and with no witnesses.
ADVERTISEMENT