Say Good-Bye To ‘Pay-For-Delay’ And Save Money With Generic Medications

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As seen in today’s LV Daily, generic medicines offer the same benefits as brand-name drugs, but come with a much lower price tag. Choosing generics, both for prescription and non-prescription medications, can save you tons of cash each year.

Once the patent of a brand-name drug expires, competitors can release FDA-approved copies of that drug. The generic version may look different, but the active ingredients are exactly the same. We took a look earlier and saw that generics are much cheaper because their manufacturers do not have to pay for research, product development, or advertising. That’s already been done. Plus, once multiple manufacturers can produce the same drug, competition drives prices down.

Unfortunately, some brand-name drug companies want to do everything they can to hang on to their profits and fend off competition from generic manufacturers. In a sneaky practice known as “pay-for-delay,” brand-name manufacturers cut deals with would-be competitors, paying them substantial sums of money to delay the release of their generic copies.

While the generic maker enjoys a hefty payoff and the brand-name company maintains its monopoly, consumers suffer and are forced to pay the inflated prices set by brand-name manufacturers. The Federal Trade Commission estimates that, if they continue, these “pay-for-delay” agreements will cost American consumers approximately $35 billion over the next decade!

Fortunately, on July 1st, the House of Representatives approved a bill to limit these nasty arrangements. Although the bill does not completely ban such deals, it would make it much harder for drug companies to conduct them legally.

We are now waiting for Senate approval of the bill. But if it passes, not only would American consumers save billions of dollars on the medications that they need to stay healthy, but the federal deficit would also decrease by about $2.6 billion over the next decade. Sounds like a no-brainer to us!

Save more money by making sure your health insurance fits your needs. For more on health care, find out how the new reform acts are going to affect you.

Follow Fiona on Twitter @FionaM523! Follow LearnVest on Twitter @LearnVest!

 

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