New Ruling on Pay-for-Delay May Help Bay State Residents

When Silvio Scaglione of Revere had heart surgery 20 years ago, he knew he’d be on cholesterol-lowering drugs for years to come, perhaps the rest of his life.  What he didn’t anticipate, however, was the cost of one of the drugs, a statin called Lipitor, manufactured by pharmaceutical giant Pfizer, Inc.

Scaglione, 77, took Lipitor for about 15 years with no other option since a generic version of the medication wasn’t available. While he takes other medication in addition to Lipitor, Scaglione says he knows he’s lucky to have always had health insurance, which helps defray some of the medication costs.

He isn’t alone. We recently spoke with several members who’ve struggled to afford Lipitor and similar drugs, since generic versions—which would cost less—haven’t been available.

That may be changing from now on.

Last month, the Supreme Court ruled that so-called “pay-for-delay” agreements, made between brand-name and generic drug manufacturers, may violate antitrust laws.

Pay-for-delay takes place when brand-name pharmaceutical companies pay generic manufacturers to delay bringing lower-cost generic medications to market. This allows brand-name manufacturers to continue to earn top dollar, while consumers are forced to continue paying higher fees for drugs like Lipitor because a generic option isn’t available.

“The Court’s decision recognizes that pay for delay arrangements may violate antitrust laws,” said Joyce Rogers, AARP senior vice president for government affairs. “Making sure prescription drugs are available and affordable for consumers is critical to our nation’s health care system. 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.”

Joyce added that such agreements “artificially inflate health care costs across the board.” In fact, the Federal Trade Commission estimates these agreements cost consumers and taxpayers $3.5 billion per year.

According to Forbes.com, Lipitor was once the top-selling drug in the world with top earnings of $9 billion. And according to a report issued last month by the AARP Public Policy Institute, Lipitor sales are expected to generate about $3 billion in sales in 2015.

Many people, like Rada Elegant of South Yarmouth, know this all too well. Elegant, 65, says when she switched to Medicare last November, she was told the plan would not pay for Lipitor unless she had a “tier exception.” Elegant had been on the drug for 15 years. She went without until January of this year, when the generic was available and she was able to make the switch. Fortunately for her, the three months she wasn’t on a cholesterol-reducing medication didn’t compromise her health—as far as she knows. “There were no visible physical effects,” she said, “but it probably had an effect. I know I was frustrated.”

For Joe Sergi of Hanson, deciding if he could continue affording his medication—or pay for heat for his home—was a decision he came close to having to make. The 67-year-old accountant has been on Lipitor for about 8 years, but only switched to the generic in January when it became available. He said once the generic version became available, “the cost of Lipitor shot up by about $100,” yet his insurance would not immediately pay for the generic. “The brand was difficult to afford. Once I went on Medicare I cut back my workload and started to draw Social Security, but the higher premiums made it harder to manage,” he said. Approximately six months after reducing his workload, his insurance agreed to pay for the generic, which he said “came in at the right time.

“It never caused me not to be able to eat or to pay my bills, but it certainly was a budget concern,” he explained. He said he considered rationing his Lipitor pills, “but it never came to that. But I did get concerned about what I would do if I started to get short—what would I do, for example, in the winter if heating costs got too high? Fortunately for me, the cost [of the medication] went down.”

For Joe Guide of Yarmouth, being on Lipitor has been an on-and-off cycle. Ten years ago he went on Lipitor, which his insurance covered for the first year. Then coverage ended, and Joe had to switch to another medication. When the generic became available he switched to that but he’s since been switched back to Lipitor, for which he pays $60 per month. Explaining that it’s difficult to afford, Guide also seemed to echo what was most on the minds of everyone we spoke with: “It makes me worried for the future,” he said.

For cost comparisons on prescription medication, use AARP's Drug$aving Tool. 

Interviews for this article were conducted by Kira Hessekiel, Advocacy and Outreach Support, AARP Massachusetts