Ultimately, this kind of engineered market domination hampers the ability of consumers to access affordable treatment.
Paul Anley, board director of the National Association of Pharmaceutical Manufacturers and CEO of South African generics manufacturer, Pharma Dynamics, says it is crucial that the South African government addresses the concerns raised in the report, as the country cannot afford to continue paying exorbitant prices for medications where cheaper alternatives are available.
"At issue is the practice of some big pharmaceutical companies to release their original product in a different package under the auspices of it being a 'generic' version of a drug before their original patent expires," says Anley.
"Releasing these 'pseudo-generics' is done in a bid to muscle out generics manufacturers to ensure a continued price advantage. Ultimately, this has the effect that South African consumers and medical aids continue to pay higher prices for medication long past the expiry of a patent, when a cheaper generic should already have been available."
Anley says the US government had already been in the process of clamping down on the practice, but has redoubled its efforts after the release of the FTC report which investigated the short and long-term effects of so-called "authorised generic drugs" or pseudo-generics produced by originator companies.
Outraged over the report, Democrat Senator Jay Rockefeller, chairman of the Senate Finance sub-committee on Health Care, said authorised generics could reduce the incentive for "true generic companies" to enter the market.
"That allows brand name companies to unfairly dominate the marketplace long after their patents have expired. The report also confirms that brand-name companies are using the threat of authorised generics as leverage in shady deals that actually keep true generics out of the marketplace," Rockefeller said.
"In these cases, Americans pay more while the drug companies make millions. Now more than ever, it is critical that every dollar spent on healthcare must be put to good use, and I intend to find ways to create more competition in the drug industry so that consumers and taxpayers get a better deal."
Democrat Congressman Henry Waxman said that "brand-name drug companies use anti-competitive agreements to keep prices high and overcharge consumers," and urged the FTC and Congress to "act to halt these abusive practices".
SA government urged to act decisively
Anley urged the South African government to also heed the findings of the report, and to act decisively to ensure that local taxpayers, consumers, and especially the poor, who often had to forego potential life-saving treatment because of the high price of medicine, would not carry the burden of the uncompetitive practices of big pharmaceutical companies.
"The South African government has started to look at regulating uncompetitive practices," says Anley.
"However because of the rapidly escalating cost of healthcare, it has now become a matter of urgency that regulations be tightened locally. The same methods identified in the FTC report are being employed here, to the detriment of consumers and the healthcare system as a whole.
"South Africans can no longer afford to pay unnecessarily high prices for medicines because of uncompetitive practices which kept more affordable generics off the market and benefit only the big pharmaceutical companies," says Anley.
