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This Isn’t A Game Of Monopoly

posted by Alicia Caramenico

on May 5, 2015

Today, the opinion pages of The New York Times highlighted a major problem in health care, runaway drug prices. The editorial noted that many pharmaceutical companies increase prices arbitrarily and charge whatever the market will bear. But these ever rising prescription drug prices mean more expensive coverage for individuals, families, and employers. Many of the astronomical price tags for medicines can be traced back to business practices that promote monopoly-like pricing rather than improved patient access. They include:

Product hopping: Consumers will be hit with higher drug prices if pharmaceutical companies are allowed to artificially prolong drug patents to avoid competition from generics. These anticompetitive pricing schemes would block any new medications from the market, resulting in fewer treatment options and sky-high costs for consumers.

Biosimilar blocking: Some drug companies continue to try prevent meaningful competition from biosimilars. For example, Janssen sued Celltrion and Hospira to delay or block a less costly biosimilar version of its autoimmune drug Remicade.

Pay-to-delay: Drug companies will pay generic drugmakers to keep lower-cost competition out of the market, and those arrangements are raising antitrust concerns. Last month, Teva Pharmaceutical Industries agreed to pay $512 million to resolve pay-for-delay allegations that it offered compensation to postpone the entry of generic versions of a narcolepsy pill, as the Wall Street Journal’s Pharmalot reported.

Pharmaceutical consolidation: Drug mergers are resulting in price jumps, while no improvements are made to the drugs and no moves are made as to where the drugs are manufactured. As the Wall Street Journal recently noted, purchasing a drug and increasing the price is an easy way to boost sales without having to spend years doing costly, risky research to develop new treatments.

Such behavior will continue to thwart efforts to create a sustainable, vibrant and innovative health care system for everyone.