Plavix: Insight into Sticking it to the Consumer

To give a little insight into the greed of our friends in the pharmaceutical industry, consider that it is generally legal for drug manufacturers to pay generic drug manufacturers to not manufacture generic copies of their medications, even as patents set to expire.

From the latest New England Journal of Medicine:

“In August, pharmacies began selling a cheaper, generic version of the blockbuster antiplatelet agent Plavix (clopidogrel). This was good news for patients with cardiac disease or stroke who cannot afford to buy the medication at more than $4 a day. But to Bristol-Myers Squibb and Sanofi-Aventis, who produce and market the drug, it was a financial disaster. Plavix is the world's second-best-selling drug — 48 million Americans use it on a daily basis — and with sales of more than $6 billion last year, it accounts for about 30 percent of Bristol-Myers's total earnings. In an effort to keep the generic version off the market, Bristol-Myers and Sanofi had agreed to pay its Canadian manufacturer, Apotex, $40 million not to release it until 2011. If this agreement fell through because it was deemed unapprovable by government authorities, Bristol-Myers–Sanofi would pay a break-up fee of at least $60 million and they wouldn't take legal action in advance to stop Apotex from releasing the generic. If part of this payoff was late, Apotex would claim "interest at a rate of $20,000 per day," Chief Executive Officer (CEO) Barry Sherman informed a Bristol-Myers executive by e-mail after the companies' pay-off settlement was rejected by government reviewers…”

“…In the case of Plavix, after the authorities rejected the initial settlement between Apotex and Bristol-Myers–Sanofi, the companies reached a second settlement, but by the end of July 2006, it, too, had unravelled in the wake of revelations that the Department of Justice was launching a criminal investigation of the deal. A week later, Apotex began flooding the market with generic clopidogrel, and within days, more than 60% of Plavix prescriptions were being filled with the generic, priced up to 20% lower than the brand-name product. On August 31, Bristol-Myers and Sanofi won an injunction preventing further sales, but by then, Apotex had shipped quantities that industry analysts expected to last until 2007.

The case offers a rare glimpse of the high-stakes arrangements through which pharmaceutical companies delay sales of generics and keep drug prices high — all under the watchful eyes of the Federal Trade Commission (FTC) and the Department of Justice. Though the cash payments at the heart of this deal are shocking, such "reverse payments" from a brand-name drug producer to a generics company are not illegal. What's unusual about the case isn't the millions promised to Apotex, it's that the settlement fell apart and generic clopidogrel was released for sale. In recent years, such settlements have generally stuck, despite federal authorities' efforts to undo them, and generics have been kept off the market.”

The article goes on to describe that these arrangements are relatively common and end up costing consumers a fortune.

For much more on this topic, interested readers can do a quick search on PharmaGossip. There are dozens of relevant posts.