Dec 29, 2020

Part II: Gaming the System to Undermine Competition at the Expense of American Patients

Before the COVID-19 pandemic, more than 58 million Americans struggled to afford their prescription drugs. Now, the ongoing economic impact of the public health crisis continues to leave millions of American workers, families and seniors struggling just to stay afloat. Meanwhile, prescription drug prices continue to rise, due to continued bad behavior from Big Pharma – making it even harder for American patients to afford their medications.

From engaging in price hikes during a pandemic and angling to price-gouge Americans on COVID-19 treatments and vaccines, while receiving billions of dollars from taxpayers, to escalating its assault on the critical 340B program and purposefully blocking competition and engaging in kick-back schemes, Big Pharma continues to place profits over people.

On top of this year of bad behavior, Big Pharma can be expected to maintain an annual tradition of ringing in the New Year with a fresh round of price hikes beginning on January 1. In the countdown to these New Year pandemic price hikes from Big Pharma, this blog series will outline the egregious actions of the industry over the past year, as a reminder, that policymakers in Washington must act to hold drug companies accountable. 

Yesterday, we explored Big Pharma’s price-hiking “business-as-usual” during the pandemic. Today, we’re taking a look at how Big Pharma has continued to game the system to undermine competition in order to keep prices high.


Engaging in anti-competitive tactics to maintain product monopolies, long-beyond reasonable periods of exclusivity, is a time-honored tradition for Big Pharma. Pharmaceutical companies abuse the system by deploying a host of anti-competitive tactics – including ploys like co-pay coupons, ‘charitable’ kickback schemes and patent abuse – to prevent patients from accessing more affordable alternatives — often for decades:

  • ‘Charitable’ Kickback Schemes: It’s no secret that Big Pharma employs a number of shady tactics in order to keep prices high. Recent reports show how brand name drug manufacturers game the system by using industry backed ‘charities’ to provide kickbacks in the form of copays to doctors and patients to quell concerns over sky-rocketing prices.
  • Co-pay Coupons: Brand name drug manufacturers have long used co-pay coupons to drive patients towards their expensive drugs and away from cheaper alternatives under the guise that they are helping patients afford their prescription medications. This scheme keeps health care costs high for patients and taxpayers.
  • Patent Abuse: Big Pharma has a long history of engaging in patent abuse schemes, like patent thicketing and product hopping, to hinder generic competition and maintain monopolies over their biggest money makers — allowing drug companies to repeatedly hike prices while patients and providers are left with no more affordable alternative.

Big Pharma’s Biologic Patent Abuse

As prices continue to climb, a September 2020 study from Avik Roy and Gregg Girvan of the Foundation for Research on Equal Opportunity (FREOPP) found that ballooning spending on U.S. prescription drugs is being particularly driven by Big Pharma’s abuse of the patent system to undermine biologic and biosimilar competition.

The report, “The Growing Power of Biotech Monopolies Threatens Affordable Care,” finds that despite representing less than one percent of U.S. prescriptions, biologic drugs account for nearly half of all drug spending. That’s because biologics face less competition from their generic equivalents, known as biosimilars, due to differences in how the marketplace is regulated and how Big Pharma games the system to undermine competition. Without action, the study’s authors estimate the anti-competitive nature of the biologic drug marketplace will cost American patients more than $30 billion from 2015-2029.

Meanwhile, A Recent Report From The House Committee On Oversight And Reform Details “The Specific Tactics Drug Companies Are Using To Raise Prices, Maximize Profits, And Suppress Competition Among Other Companies.”

  • “Celgene Relied Heavily On Taxpayer Funded Academic Research To Develop Revlimid, And Its Internal Pricing Decisions Appear To Have Been Unrelated To Past Or Future Investment In Research And Development.” (Staff Report, “Drug Pricing Investigation: Celgene And Bristol Myers Squibb – Revlimid,” U.S. House Committee On Oversight And Reform, 9/30/20)
  • “Amgen Leveraged The U.S. Patent System To Limit Biosimilar Competition For Enbrel And Prevented U.S. Patients From Accessing Lower-Priced Versions Of The Drug Available To Patients In Other Countries,” And “Entered Into Settlement Agreements To Delay Entry Of Generic Equivalents” For Sensipar. “Internal strategy documents indicate that Amgen used minor changes to Enbrel’s design— including a new version of the injection device called Enbrel Mini with Autotouch—to drive sales and limit competition. For Sensipar, Amgen entered into settlement agreements to delay entry of generic equivalents. Amgen also attempted to gain additional market exclusivity for Sensipar by showing that it could be used in children, despite knowledge that the FDA was unlikely to grant approval.” (Staff Report, “Drug Pricing Investigation: Amgen – Enbrel And Sensipar,” U.S. House Committee On Oversight And Reform, 10/1/20)
  • “Novartis Used Several Anticompetitive Tactics To Delay Generic Competition And Maintain Its Profits.” “First, Novartis undertook regulatory steps to extend its primary base compound patent on Gleevec for 26 months, from May 2013 to July 2015. Novartis also engaged in a practice known as ‘pay for delay,’ where the company struck a deal with the first generic entrant to delay entry of the generic by six months. Although the generic company had initially announced that it would price its generic 30% below the price of Gleevec, the generic company ultimately entered the market at a price just 6.4% lower than Gleevec’s price. Novartis executives hailed this high generic price in an email: “That’s good news.” Experts estimate that these strategies—a six-month delay for generic entry and then a six-month duopoly—resulted in $700 million in excess costs to payers in the one-year period from 2015 to 2016.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)
    • Gleevec’s Price Increases Were Not Justified By R&D. “Novartis reported to the Committee that it had no specific data on R&D expenditures related to Gleevec prior to FDA approval because ‘the Company no longer has access to the records reflecting the very significant Gleevec development spend by the Company prior to FDA approval.’ Novartis explained that, between 2001 and 2019, its Gleevec developmental costs exceeded $700 million— representing a tiny fraction of Gleevec’s net U.S. revenue during the same time period. For each year from 2009 through 2016, Novartis made more than it spent on Gleevec R&D combined during a 19-year period. Public documents also indicate that Gleevec’s preclinical R&D costs were almost entirely funded by grants from the National Cancer Institute and nonprofit organizations.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

Stay tuned this week as we continue to expose Big Pharma’s Year of Bad Behavior.

CLICK HERE to read: “Dose Of Reality” Big Pharma’s Year of Bad Behavior Part I: Sticking with Price-Hiking “Business as Usual” During Pandemic.