generic drug manufacturers browsing by tag


Drug Company Reverse “Payola” Costs Families $Billions

Monday, December 14th, 2009

When I was a little girl, just beginning to play the saxophone in the all-girl family band that would one day win acclaim as The Thornton Sisters, the big scandal in the music industry was payola. Radio disc jockeys took money under the table in exchange for playing certain records on the air. The practice, equivalent to bribery, was illegal.

I recently learned payola is alive and well – but with a reverse twist, and in a different industry. Major pharmaceutical companies have been paying off generic drug companies in order to keep the generics off the market. So, instead of “pay to play” we have “pay to not play.” Without generic competition, major pharmaceutical companies can – and often do – charge exorbitant prices. It’s estimated that pharmaceutical reverse payola costs us $3.5 billion per year.

Here’s how the scheme works.

Let’s say a major pharmaceutical company manufactures a cholesterol-lowering drug that many doctors prescribe. Because the drug is patented, and the company has spent billions of dollars in research and development for that drug, the pharmaceutical company is then given a “head start” to charge whatever the market will bear in an attempt to recoup its investment and time spent developing the new drug.  The downside is that people whose doctors prescribe the drug either must pay the price or go without.

But the effective life of the drug patents on a name brand medicine is from seven to twelve years.  After the pharmaceutical company’s patent expires, other drug companies are permitted to manufacture and market identical chemical versions of the drug and cheaper generic versions of the drug become available to those who need it. How much cheaper? At Costco Pharmacy, a month’s supply of the name brand version of a popular tranquilizer costs $146.22. The generic version – which must by law provide the identical medication in identical amounts – costs just $8.32 for a month’s supply.

Obviously, if a drug company can continue to get close to 20 times the money for the same product, it’s going to look for ways to keep out generic competition. Some pharmaceutical companies are paying manufacturers of generic drugs in exchange for the generic manufacturers’ agreement not to market generic versions. A bipartisan effort is underway in the United States senate to make the practice illegal.

Such “reverse payola” could be compromising the health of our families and loved ones. According to a survey of 2,004 adults, done earlier this year by Consumer Reports, because prescription drugs costs are so high, 28 percent did one or more of the following:

  • Failed to fill a prescription (16 percent).
  • Skipped a dose (16 percent).
  • Took an expired medication (11 percent).
  • Cut pills in half (10 percent).
  • Shared a prescription (4 percent).

About 23 percent said they cut back on groceries in order to afford their prescriptions.

Although brand name medications often are better formulated with better bioavailability and, therefore, are often more effective than generic drugs, patients and physicians should have the option to choose which is the best under specific circumstances.  They must weigh the cost of the drug with the intended outcome.  However, the practice of “reverse payola” is unconscionable and violates the principles of good medical and pharmaceutical practice.

Generic drugs are far more likely to be affordable – and therefore available – than brand name versions. That’s where you and I come in. We need to contact our senators and congressional representatives and tell them to make such practices illegal. We need to contact our local newspapers, TV stations and other media, and ask why they aren’t covering this story. We must ensure that we and our loved ones can afford the medicines we need in order to stay well.

– Yvonne S. Thornton, MD, MPH