Squashing Generics

Drug companies increasingly are reaching legal settlements that delay the introduction of cheaper generic medicines. Federal regulators told lawmakers seeking to ban the agreements yesterday that the pacts cheat Americans of billions of dollars a year in savings.

Reactionary press or fact?

The Federal Trade Commission and others allege that the settlements allow brand-name pharmaceutical companies to pay off would-be generic competitors, which then agree to delay introduction of their less costly but otherwise identical versions of the original medicines.

These are serious charges.

In a typical settlement, the payment is less than the potential loss in sales once a generic competitor enters the market, said Michael Wroblewski of Consumers Union. And the generic manufacturer makes more from the payment that it would from selling its version of a drug, he said.

This is true of most legal battles. It is less expensive to pay the fine than to do what is morally right.