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Drug 'Pay-for-Delay' Agreements Are Bad For Consumers — Especially Older Americans

Read AARP President Rob Romasco's Senate testimony

Unfortunately, pay-for-delay agreements have been and continue to be increasing. Given that the pharmaceutical industry faces an unprecedented number of patent expirations, this trend will continue and likely accelerate.

Several of the top 10 leading medicines, including Nexium, Celebrex and Crestor, are set to lose patent protection over the next few years.

A recent report from AARP's Public Policy Institute examined events as the popular anticholesterol drug Lipitor first faced generic competition, including a reported pay-for-delay agreement.

The report found that the retail price of Lipitor increased by 17.5 percent in 2011.

Pfizer, Lipitor's manufacturer, was raising its price while the alleged pay-for-delay agreement was in place. The average annual retail price of Lipitor increased by roughly $300 between 2010 and the 2011.

I hear from our members just how punishing higher brand-name prices can be.

John, from Greenwood, Indiana, is one example. A longtime Lipitor user, he was paying $70 out of pocket for a three-month supply. Now, with the generic, he pays only $15 for the same three-month supply.

This might not sound like much, but to John — and to many older Americans, particularly those on a fixed income — this reduction made, in John's own words, a "dramatic difference."

AARP filed a friend-of-the-court brief (PDF) in the recent Supreme Court challenge on pay-for-delay agreements — in support of the FTC's argument that pay-for-delay agreements are anticompetitive.

The Supreme Court decision represents a major step forward, with more antitrust claims against pay-for-delay agreements likely to go to court and receive the scrutiny they deserve. However, experts generally believe that pay-for-delay agreements, while now more legally risky, will continue unless Congress intervenes.

We believe a legislative solution is needed to eliminate pay-for-delay agreements and save money for consumers, businesses and taxpayers.

AARP urges Congress to take action on S 214, the Preserve Access to Affordable Generics Act, a bipartisan bill sponsored by Sens. [Amy] Klobuchar [D-MN] and [Chuck] Grassley [R-IA]. The Congressional Budget Office (CBO) expects this legislation would accelerate the availability of generic drugs and save over $4.7 billion over 10 years.

We are also a strong supporter of another bipartisan bill, S 504, the Fair and Immediate Release of Generics Act, sponsored by Sens. [Al] Franken [D-MN] and [David] Vitter [R-LA]. The CBO estimates this bill would save $3.8 billion over 10 years.

AARP is committed to working to further lower the cost of prescription drugs through the enactment of responsible changes that improve access and reduce costs for consumers, businesses, and the Medicare and Medicaid programs.

We look forward to working with members of Congress from both sides of the aisle to address pay-for-delay agreements. We seek to ensure that each and every American has access to affordable prescription drugs.

Rob Romasco is the president of AARP.

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