Drug Companies Are Ripping Us Off - But Now We Can Fight Back

Do you want to pay less for your medications? Of course you do! Unfortunately, some pharmaceutical companies are doing everything they can to deprive us of cheaper options.

However, a recent Supreme Court ruling gives regulators and consumer advocates a chance to fight back.

Pharmaceutical companies keep cheaper options off the market by using a "carrot and stick" approach that includes the threat of a lawsuit for rivals introducing cheaper variations and the promise of hefty payoffs to rivals for keeping their generics off the market.

Here's how it works.

Generic-drug producers can sell their own versions of a drug that is still under patent, if they can show that the patent is invalid or that their generic version does not violate the patent. This strategy offers generic-drug companies the opportunity to introduce their versions before patents expire -- giving them added time to secure valuable market share. On the other hand, that approach brings risks of lawsuits as the proprietary drug companies attempt to defend their patents.

To prevent competitors from attempting that, proprietary-drug producers sometimes offer "pay-for-delay settlements" in lieu of pursuing patent infringement lawsuits. These settlements remove the threat of losses to the generic-drug company if it lost the lawsuit, as well as offer payments (sometimes called "reverse payments") to generic-drug makers to keep their products off the market.

Avoiding lawsuits and raking in money to not do something? Sounds like a win-win for everyone. Everyone except you, the consumer.

Possible Antitrust Violations

According to Monday's Supreme Court ruling, these practices may sometimes constitute antitrust violations -- particularly when the payments prevent competitors from introducing generic products into the market even when the proprietary-drug company's patent is invalid, or isn't in fact violated by the generic drug.

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In such cases, these reverse payments can cost consumers a great deal, as they lose out on the opportunity to acquire generic drugs at as little as 15 percent of the cost of their branded counterparts. In fact, the Federal Trade Commission claims that these settlements cost taxpayers and consumers $3.5 billion a year in higher drug costs.

Monday's ruling permits regulators and consumer advocates to sue drug makers over this practice and leaves it to the courts to review the circumstances on a case-by-case basis.

How You Can Save Money Now

The new ruling arguably puts regulators and consumer advocacy groups in a better position to improve consumer access to cheaper drugs, but what can you do to reduce your medical tab now? Here are a few tips:

1. Always ask about generic options. When your doctor prescribes you a brand-name drug, ask if any generic options are available. Doctors will still sometimes prescribe brand-name drugs even after generic alternatives have been introduced into the market.

2. Ask for free samples. Pharmaceutical companies often provide doctors with promotional samples of their brand-name products. If you're stuck with a brand-name prescription, see if you can score some of these.

3. Find cheaper suppliers. According to a study mentioned in a 2011 Consumer Reports article, the prices for brand-name drugs vary by an average of 29 percent. While the article noted HealthWarehouse.com as the cheapest option and Publix as the most expensive, it recommends calling around to find the cheapest supplier for your prescriptions.

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