Rare Afflictions: Medicines or Markets - 04

Move Over Medicines.. time for the Boulevarde of pharmasupra-schemes..

But first, the weekly world edition of The Telegraph often draws a smile at the breakfast table when its resident Matt cartoon makes wry on news. This morning his wit took aim at ‘scientific’ announcements with a couple of blokes depicted at table with a microscope, test tubes and a plate on which was placed a notable vegetable. On the wall behind them a sign read: GM Food. And clutched in his hands a clipboard from which one of them is making an announcement to the world at large. Saith he, “We have developed a carrot that can leap off the plate and punch (someone)—“

Who does not matter, for crackup is already underway and healthily humored peristalsis the better for my digestion.

Yet for the purpose of this blog the cartoon has the added value of serving point on invention and the inventive mind. The former set in context of patent defensibility, the latter in commercial self-interest.

Let’s step back a little..

To US political days of the early 1980s. Senators Orrin Hatch and Henry Waxman had put up a bill to address concerns at branded drugs whose monopoly would lapse as each exclusive-rights-to-sell term expired. Competition was the way. Tried, true, the one-and-only way. BigPharma enjoyed a decade at least for each of its brands, to grow sizeable markets at monopoly prices and after easily recovering R&D costs go on to make fortunes. Giving them wherewithal to adapt and take on the new generics. Lower brand prices, do generics themselves(a subsidiary or affiliate firm to keep more of a market’s revenue) or better, new drugs to keep on the good work..

In 1984 the Hatch-Waxman Act passed into law. Competition the goal it rewarded firms who gained FDA approval and made first filing that a patent was invalid(e.g. timed out) and its product did not breach that patent. With an immediate 180 day exclusive rights-to-sell agreement into markets occupied by the forerunner. Exclusive that is to say from other generics or competitors. Not to be missed, however, would be that such exclusivity also avoided the FDA’s approx. 30 month approval period in respect of other applicants. To wit, first filers had a clear 3 year run into the lapsed patent brand’s market. Opportunity indeed, for it could mean hundreds of millions dollars in a very short time.

Underlining this point and with the benefit of a good deal of experience in the markets since the Act, the Generic Pharmaceutical Association in 2006 said that the ‘vast majority of potential profits for a generic drug manufac­turer materialize during the 180-day exclusivity period.’

Enter the 'Competitors'..

Being patent-holder Solvay Pharmaceutical with its testosterone-replacement brand, Androgel. With market monopoly it was the sole price-setter. Followed in due course by generics firms(Activis is well cited in the case link below).  Who filed per the Act. Only to find itself sued by Solvay claiming patent infringement. Despite which the FDA eventually approved the firm’s generic alternative modeled after the patented brand.

So.. Activis(who had undergone a name change along the way) could either bring its generic to market via the Act’s intended competitive route, or… big surprise (in its day IMO).. promote Solvay’s drug after making a REVERSE PAYMENT AGREEMENT (aka pay-for-delay deal. That is to say, and according to proceedings before the SCOTUS [No. 12–416. Argued March 25, 2013—Decided June 17, 2013 ] receive annual payment from Solvay ranged between $19M and $30M for 9 years).

Nine whole years!! Hey, what is this—what gives—theyse gotta compete not pile on paying patients!! Haven’t they?

Well, my answer to that would take me back to the secondhand goods dealer who was in no mood to haggle prices with a customer one day and bellowed, “I’m in business to make money, mister, not friends!”

And talking about pile, the US Federal Trade Commission have put $3.5B a year on the extra money paid out to patent monopoly pricesetters over and above generics costs. Yes, more than enough money to buy friends.. (lol).

But significantly, pointedly and effectively stifling generics competition and setting up mutually shared patent prices in perpetuity by the Boulevarde’s scheme team

Waitta minute, Federal Trade Commission?, don’t I mean the FDA?

Fraid not, my dear reader, for in this matter the Regulations arm of the FTC holds a very significant brief, and advocacy, role. Well aware as it is, how homeland commercial behavior is subject to global scrutiny in a global world.

By which we could reasonably say that their concern at homeland prices transpose into offshore markets particularly where risk factors such as arise from the above example are calculated and/or incorporated to the US pharmaceutical industry’s advantage. [cf if you will how a storm in the Gulf puts cents on a liter of kiwi gas station gasoline].

The Federal Trade Commission's Pursuit..

We should understand how the FTC is pursuing this matter on a basis of breaking up the logjams arising from such non-competitive arrangements between firms. Its guide is anti-trust law, not as in this case you may be led to believe by Pharmas and their lobbyists, patent exclusivity.

To the precise point then: does patent confer anti-trust immunity?

In the first instance - FTC approach to the District Court - patent exclusivity rules.

In the second instance - FTC to Appeals Court(11th Circuit) - complaint dismissed.

In the third - FTC to SCOTUS re dismissal - UPHELD. Appeals erred in dismissal

As to why the SCOTUS ruling was sought there had appeared a “Circuit split” when FTC pursued and secured a ruling to favor anti-trust action in a similar case—excellent link. Certiorari aka Petition to Review thus arose. Interestingly the 5-3 Supremes decision came by independent ‘rule of reason’ thinking.

Aspects of the decision:—

1. A view that the Appeals Court was fearful of complex expensive litigation- well-expressed in paragraph 4 here

2. How the Hatch-Waxman Act required disputing parties to report settlement terms to .. wait for it.. federal anti-trust regulators..

Suggesting other possibilities that include:—

* Parties do ‘agreement’, not dispute, in their very own workaround for ‘patent’ price prolongation.

* Legislators and their advisors never anticipated reverse payment(RPA) with its connotation of bribery making legal behavior let alone accepted practice.

Both of which appear intolerable. Hence in clear need of resolution. RPA the pro-competitive way may be one satisfactory explanation. Else thoroughgoing litigation via regulators and  plaintiffs which the Supremes guidance may have set in train.

Though such a course is unlikely to prevent further impacts in offshore US prescription drug markets. And ought delay adequate benchmark settings to any trade arrangements until it has a better grasp of clean slate and real world post-Recession needs.


Next time a  peek at the medicines distribution side, distortions caused by make merchants in sizeable patient communities...