Supreme Court decision may save consumers money on drugs

AARP is hopeful a U.S. Supreme Court decision today will end pay-for-delay prescription drug agreements that cost consumers and taxpayers billions of dollars a year in Michigan and across the nation.

Pay-for-delay agreements involve brand name and generic drug manufacturers entering into arrangements that pay the generic drug manufacturer to delay bringing its lower-priced alternative to market. This practice not only denies consumers access to lower-cost treatment options as soon as possible, but also prevents competition, said Joyce Rogers, AARP Senior Vice President, Government Affairs.

AARP, which filed an amicus brief in the case, is pleased the High Court’s decision recognizes that pay-for-delay arrangements may violate antitrust laws, Rogers said.

Given that in Michigan more than 120 million prescriptions were filled in 2011, pay-for-delay agreements for Lipitor and other drugs (including other popular prescriptions like Nexium, Plavix, Provigil and Cipro) can hit consumers in their pocketbooks. In 2011, Michigan had about 1.2 million uninsured people.

“The delay and lack of low-cost options reverberates throughout the health care system – including Medicare and Medicaid – and is especially burdensome for consumers,” Rogers said.

“AARP is hopeful this decision will lead to an end to such agreements and that ultimately courts will find them anticompetitive and illegal, promoting more competition and helping reduce prescription drug costs for programs like Medicare and Medicaid as well as for consumers and other payers of health care.”

Ending these harmful agreements is an example of a responsible way to reduce Medicare costs without cutting benefits or forcing seniors and future retirees to pay more.

AARP has long advocated for ending these agreements that excessively extend patent monopolies and can result in patients foregoing needed treatment because of the high cost of brand name drugs. These agreements also artificially inflate health care costs across the board; the Federal Trade Commission estimates these agreements cost consumers and taxpayers $3.5 billion per year.”

Another group negatively affected by pay-for-delay agreements are those seniors who reach the “donut hole” in their Medicare Part D coverage. When a Medicare recipient has spent $2,970 for covered medications in any year, they reach the donut hole and must pay for prescriptions on their own until they’ve spent $4,750 – nearly $2,000 out of pocket. In 2011, 106,707 Part D enrollees in Michigan reached that donut hole coverage gap where they are responsible for total costs.

 Other groups joined AARP in signing the amicus brief including the American Medical Association, National Legislative Association for Prescription Drug Prices and the U.S. Public Interest Research Groups. The full brief is available here: http://www.aarp.org/content/dam/aarp/aarp_foundation/litigation/pdf-beg-01-09-2013/FTC-v-Watson.pdf

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