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.
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.
5 Companies Set to Cash In on America's Aging
Drug Companies Are Ripping Us Off - But Now We Can Fight Back
Medtronic is a maker of medical devices, specializing in cardiovascular products like pacemakers, valve replacements, and various items to help repair problems in the circulatory system. But Medtronic also serves a number of other areas, including ways to treat spinal problems, diabetes and chronic pain.
One downside for investors is the fact that beginning this year, Medtronic has to pay a surtax on medical-device revenue, which was imposed to help pay for the health care reform law. Even with the tax sapping its profits, though, Medtronic will benefit from the needs of more patients needing treatment for heart-related illnesses and other ailments using its devices.
This iconic drugstore chain has been around for decades, paying ever-higher dividends to shareholders. As prescription drug use grows, Walgreen stands to have more traffic in its stores, and that in turn should drive more sales of the unrelated retail goods that the company stocks on its store shelves.
In addition to benefiting from older Americans, Walgreen has made a big push recently for international growth. Aging populations in economies around the world represent a great opportunity for Walgreen to expand beyond its domestic stronghold.
MetLife is one of the biggest providers of life insurance in the country. Insurers have gone through hard times in recent years, as poor investment returns and high payouts on certain types of insurance left them reeling from the financial crisis five years ago.
But for investors, MetLife's moves have made it a stronger stock. It's decision to stop offering long-term-care insurance has been tough on older Americans seeking protection from high health care costs, but its core insurance business benefits from the longer lifespans of an aging population. With some favorable products tailored to retirees, MetLife stands to make big strides forward in the years to come.
The scope of Johnson & Johnson's business is wider than many people realize. In addition to its well-known consumer brands like Band-Aid, J&J also has sizable pharmaceutical and medical-device arms. Though many of its rivals have broken themselves up into smaller businesses to let the individual parts focus on their respective specialties, Johnson & Johnson still sees value in its conglomerate status.
Unfortunately, J&J has had problems with its hip replacement products, which led to recalls of certain devices. But the company has overcome similar short-term problems in the past. Given the size of J&J's orthopedics business, which by itself dwarfs many of the companies that specialize in orthopedic devices, Johnson & Johnson still stands to gain from rising demand once it addresses any safety concerns.
Omega Healthcare is a real estate investment trust that specializes in owning and operating health-care-related properties, with an emphasis on skilled nursing, assisted living, independent living, and rehabilitation facilities. A growing pool of retirees seeking the community environment that these facilities offer has led to higher demand in recent years, and those trends are only likely to continue as these communities benefit from the network effect of having older peers recommend them to (relatively) younger prospects.
For investors, the real estate investment trust framework ensures a steady stream of income for your portfolio. On that score, Omega's dividend yield of 6 percent stands out as particularly attractive, topping several other similar health care REITs.