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Has The Patent Expired on the Pharmaceutical Industry's Invincibility?

Thanks to mega-millions spent on campaign contributions and lobbying, the pharmaceutical industry has skirted government oversight of patent-extending and price-gouging schemes.
 
 
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Thanks to mega-millions spent on campaign contributions and lobbying, the pharmaceutical industry has long been Washington's 800-pound gorilla -- able to skirt government oversight of its patent-extending and price-gouging schemes by muscling politicians into doing its bidding. But now it's payback time for the big ape as drug companies find themselves under fire on a series of fronts -- assailed by Congress, federal prosecutors, federal regulators, human rights activists and international health organizations.

The most bloodstained of these battlegrounds is Africa, where the deadly AIDS epidemic has been allowed to spread while drug companies waged a protracted legal battle to keep low-cost versions of life-saving drugs from the millions dying of the disease. But last year the public outcry about these dirty deeds finally reached critical mass, shaming the drug companies' Washington lickspittles into looking at their shoes when their longtime patrons came calling for favors. So the industry was forced to relent, dropping its suit and begrudgingly lowering the price of AIDS drugs to poor countries.

But deadly habits die hard. The drug companies are still trying to get away with whatever they can, even in the face of the raging epidemic. They're currently experiencing side effects of extreme irritability over the World Health Organization's historic decision in March to release a list of manufacturers of safe AIDS drugs that, for the first time, included companies producing generic versions of drugs that are still under patent.

Even though 8,000 people die each day in developing countries because AIDS treatments are too expensive, the big drug companies just can't accept the idea that they will no longer be the only ones making the life and death decisions about access to these drugs. They even seem to be having trouble grasping the fact that the World Health Organization's first priority must be, well, world health.

The pharmaceutical industry is also finally feeling the squeeze on Capitol Hill where there is a newfound vigor for serious action on the global AIDS crisis. Last week, Sens. John Kerry and Bill Frist, the Senate's only physician, introduced a bill that would more than double U.S. spending to fight the disease. And this bill, unlike previous attempts, is expected to pass. This is thanks in no small part to the efforts of Bono, who broke down the resistance of Sen. Jesse Helms -- the most astonishing conversion since Sammy Davis, Jr. became a Jew. Bono is continuing the daunting task of proselytizing to the professional skeptics this week by leading Treasury Secretary Paul O'Neill on a tour of AIDS-ravaged Africa.

Congress is also directly taking on the pharmaceutical industry's flagrantly anticompetitive practices -- particularly its willingness to game the system in order to extend the life of its patents.

In the latest scheme, one that is costing consumers billions of dollars, drug companies are using American courts to stall the sale of generic versions of some of their most popular products. Here's how it works: When a drug's patent is about to expire, its maker tries to ward off competition by filing frivolous lawsuits against anyone looking to make a low cost, and perfectly legal, version of the pill. They don't really expect to win, but the suit can delay the generic version from hitting the market for up to 30 months -- allowing the patent holders to rake in billions in additional, competition-free sales. And the public gets to pay twice: We pay for unnecessarily high-priced drugs, and we pay for the court system they're exploiting to keep us paying the high price.

Sens. John McCain and Charles Schumer have introduced a bill to put a stop to this outrageous abuse of our legal process. Originally considered a longshot, the legislation has gained momentum, helped by the support of a number of corporations that have recognized how this kind of patent thievery is costing them hundreds of millions of dollars in over-inflated health care costs. And in a recession, little things like hundreds of millions of dollars get noticed. Executives at General Motors, for instance, figured out that drug manufacturers' maneuvering to maintain market exclusivity on 5 top selling drugs -- including Paxil, Prilosec, and Wellbutrin -- after the patents had expired, had cost GM over $200 million.

For the first time, it's not just voiceless millions in Africa or poor people on Medicare that are feeling the sting of the drug companies' ability to bilk the system. It's powerful corporations that pay top dollar for receptive ears in Washington.

The pharmaceutical industry is also finding itself where no business wants to be: in the crosshairs of federal investigators. No fewer than 20 drug companies -- including Bristol-Myers, Eli Lilly, Pfizer, and Bayer -- are being investigated by government agencies, including the Justice Department, the Food and Drug Administration, the Federal Trade Commission, and the Department of Health and Human Services.

One company, TAP Pharmaceutical Products, Inc. has already been fined $875 million for "fraudulent schemes for pricing, sales, and marketing" its prostate cancer drug Lupron -- the largest health-care fraud settlement in history. And last week, Schering-Plough agreed to pay $500 million in fines to the federal government because of long-term quality control problems at its plants. Investigators are predicting more guilty pleas and hefty settlements. If the Feds keep it up, this could be the cure for the growing budget deficit.

Since we so often lament the terrible injustices that surround us, let's take a moment to celebrate this rare instance of chronically corrupt corporations getting a helping of their just desserts. Maybe we can even patent it. Until then, a generic toast to the drug industry: Here's to you, boys. You asked for it. You got it. We can only hope there's more to come.