Patented Medications — pay-for-delay & evergreening

patentedBrand-name or patented medications cost much more than generic medications.  One would think some other inventor would dream up an alternative to sell at a lower price.  One would also think once the patent expires generics would be be quickly shipped to pharmacies.  But, as usual, it’s more complicated than you think and compounded by corporate deals not really in the consumer’s interest.

Patents are for “novel, useful and not obvious” inventions and the exclusive right to sell the item lasts for 20 years in the U.S..  Unless, someone invents something similar that the original patent owner did not think of.  Also, the the patent owner can request an extension for various reasons (adjudicated in the courts which usually takes at least a year).  Drugs are such inventions.  Some of the patented drugs are very profitable (blockbuster drugs) making millions and sometimes billions of dollars.

Big pharmaceutical companies depend on patents for their very existence.  The high cost of drug development and FDA approval is recovered during the 20 years of a new drug sales — some say it is often recovered in just 10 years.  The patents have become so expansive that other inventors are only able to find a bio similar product that can withstand intense legal action for patent infringement about 15% of the time.  But, those 15% spend so much money in legal matters they hardly see any advantage to marketing early.

When the patent runs out the price of a drug can drop 1000% as generic manufacturers enter the market.  All patients wish this would happen sooner.

Megan Thompson of PBS presented a video segment about the practices of drug companies on 6/28/14.   She told about “pay-for-delay” which is a method of preventing bio-similar products from being marketed by paying generic makers millions of dollars a year to delay marketing until the patent runs our (or longer).   She also told about “evergreening” which is a technique used near the end of a patent:  the drug price is increased substantially while a patented bio-similar product made by the same company is marketed at a slightly lower price.  Doctors trying to help lower cost change patients to the similar product and the patient never knows that in a short time the original drug becomes generic and much less expensive.

According to the FTC the combined “pay-for-delay” and “evergreening” cost consumers billions of dollars and make billions of dollars in drug company profit.

What needs to be done:

  1. Start a linear profit limitation starting at drug patent year 1 (20% above manufacturing cost) and ending at year 20 (5% profit limitation).
  2. Notification of patients by pharmacies about lower cost bio-similar products as soon as they come out.
  3. Eliminate “pay-for-delay” and drug patent extensions.

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