Consumers hit by generic drug deals

IRISH consumers are paying 20% more than they should for medicines because pharmaceutical companies are doing deals to prevent cheaper medicines coming on the market.

Major companies that develop the drugs are buying off generic drug companies that normally produce the drugs at an average of 40% cheaper once the patent has lapsed.

A study carried out by the European Commission found at least 200 such settlement agreements between companies that developed the drugs and the generic companies that make identical products.

“This means high prices for consumers and for taxpayers, whereas if you have effective competition operating you get a decent product for a decent price and you have a proper stimulus for innovation”, said Competition Commissioner Neelie Kroes.

Once the patent runs out on a drug – usually 20 years after it was first invented — generic companies are entitled to produce it. But the commission’s investigation found there was a seven-month delay in bringing to market generic versions of a sample of medicines whose patents ran out in the seven years to 2007 in 17 member states.

This cost a minimum of €3 billion, or 20% in extra spending for the countries surveyed.

Ms Kroes said if all off-patent drugs were included, including those that were not replicated by generics, then the true cost was much more.

Ireland’s medicines bill is around €2bn a year and the country is one of the few in the EU that does not allow pharmacists automatically to switch to generic versions once they are approved.

The Irish Pharmacy Union earlier this year said at least €30m could be saved by using generics. The Department of Health has resisted change, some believe because of the powerful pharmaceutical companies in the country.

The commission said it will take companies found to be operating such practices to court and announced a case against Les Laboratoires Servier and five generic companies.

The case will look at agreements between Servier and the generic companies that delayed the drug perindopril being produced cheaper by generics. The drug combats heart-disease and high blood pressure.

Ms Kroes said the study found that national authorisation processes for drugs were being used to delay generic drugs being produced.

There were also campaigns to smear generic drugs.