drug prices – Techdirt
from the abusing-the-orange-book,-green-with-greed dept
For many, many years we’ve detailed how big pharma companies, who only care about the monopoly rents they can receive on medicine while under patent, have concocted all sorts of scams and schemes to avoid having to compete with generic versions, even after their patents have expired (or been invalidated). But one of their older tricks is apparently popular yet again, though the FTC is now warning pharma that it might finally start cracking down.
If it does, it will just be reinforcing the kinds of actions the FTC used to bring. Twenty years ago, the FTC went after Bristol Meyer Squibb for false listings in the Orange Book. The Orange Book, managed by the FDA, is where pharma companies list the FDA-approved drugs they have under patent, which alerts generic drug companies basically not to make generic versions of those drugs.
But, of course, this creates a very tempting scenario: if pharma can get drugs not actually under patent into the Orange Book, they effectively save themselves from generic competition, and they get to profit massively (at the expense of the public and their need for affordable medicine).
However, despite enforcement against such abuse years ago, it seems that the FTC and the FDA have kinda let these things slip over the past few years. And Big Pharma has really taken advantage of that. Thankfully, it looks like the FTC is finally interested in cracking down on this practice again. In a new policy statement, it warns pharma companies that it’s looking into the abuse of the Orange Book and sham patent inclusions.
Brand drug manufacturers are responsible for ensuring their patents are properly listed. Yet certain manufacturers have submitted patents for listing in the Orange Book that claim neither the reference listed drug nor a method of using it. When brand drug manufacturers abuse the regulatory processes set up by Congress to promote generic drug competition, the result may be to increase the cost of and reduce access to prescription drugs.
The goal of this policy statement is to put market participants on notice that the FTC intends to scrutinize improper Orange Book listings to determine whether these constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act.
Of course, this raises some questions, including why do we make the pharma companies themselves the party responsible for making sure their patents are “properly” listed. Why don’t we have at least some process in place for these listings to be reviewed, whether when they’re submitted to the Orange Book or even if another party (such as the generic drug manufacturers) contest an Orange Book listing.
It seems the dumbest possible system is to assume that the Big Pharma companies will be honest in their Orange Book listings.
And, even though the FTC is now putting these companies “on notice,” the fact that the FTC has brought these cases in the past seems like it should be “notice” enough. Instead, it sounds like the FTC let enough pharma companies get away with this for long enough that the big pharma firms felt cleared to abuse the system this way and to delay competition in the marketplace.
The one thing I find interesting in this statement, is that they note that improperly listing things in the Orange Book may “constitute illegal monopolization.”
The improper listing of patents in the Orange Book may also constitute illegal monopolization. Monopolization requires proof of “the willful acquisition or maintenance of [monopoly] power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” This requires proof that “the defendant has engaged in improper conduct that has or is likely to have the effect of controlling prices or excluding competition,” and courts have recognized that improperly listing patents in the Orange Book may constitute an “improper means” of competition. Accordingly, improperly listing patents in the Orange Book may also be worthy of enforcement scrutiny from government and private enforcers under a monopolization theory. Additionally, the FTC may also scrutinize a firm’s history of improperly listing patents during merger review
This seems exactly correct, but notable in that very few people seem to recognize that (1) patents are government granted monopolies, and thus (2) an abuse of the patent system to get a patent or patent-like protections you don’t deserve are therefore an illegal monopoly seems like an important point. I would hope that this could get expanded to other abuses of patent and copyright law as well.
Still, given that we’ve been facing this and multiple other schemes from Big Pharma to delay generics for decades, I’m not sure anything is really going to change just yet, but at least the FTC is waking up (again?) to this issue. Now let’s see if it actually starts bringing cases…
Filed Under: competition, drug prices, ftc, generics, monopoly, orange book, patents, pharma
from the the-billion-dollar-pill-nonsense dept
For years, defenders of pharma patents loved to claim that the reason that they needed patents and the reason they had to charge extortionate rates for drugs was because of the high cost of R&D for new drugs. The numbers keep going up. When I first started covering pharma patents, the number bandied about was $600 million per new drug. Then it jumped to $800 million. Then $1 billion. The latest I’ve heard them claiming is an average of $1.5 billion per new drug.
The number has always been bunk. Back in 2004 (at which time pharma companies were claiming $800 million per pill), Merrill Goozner wrote an excellent book, called “ The $800 Million Pill” which completely rips this number to shreds, and shows how massively inflated it is. While the book is a bit out of date now, it’s still a really interesting read, and shows how almost every major new successful drug was mostly funded by the federal government (i.e., your tax dollars) with the pharma companies shouldering a tiny, tiny fraction of the purported costs. Similarly, the book “ Against Intellectual Monopoly” showed that the costs claimed by pharma companies was greatly exaggerated, and often the vast majority of the money came from taxpayer funds, with only a tiny bit being taken on by private industry. In addition, much of the cost is from the clinical trials, and there’s an argument that that is also something that would benefit greatly from federal funding (there are plenty of stories of sketchy behavior by pharma firms when it comes to some clinical trials).
Anyway, given all that, there’s a new study out that highlights (in a different way) that the claims of high drug prices being due to high R&D costs is pure bullshit. The study did something I’m surprised no one has done before: compared drug prices with the price of R&D on those drugs. If the high cost of development was really what was driving the high drug prices, there should be some correlation there, right?
The researchers compared data on R&D costs with drug prices. They found no relationship between what pharmaceutical companies spend on R&D and what they charge for new medicines. The authors also assessed whether the therapeutic value of a product was associated with its price, but found no association there either.
“Our findings provide evidence that drug companies do not set prices based on how much they spent on R&D or how good a drug is. Instead, they charge what the market will bear,” said senior author Inmaculada Hernandez, PharmD, PhD, associate professor at Skaggs School of Pharmacy and Pharmaceutical Sciences.
Of course, that finding shouldn’t really be a surprise to anyone. Of course pharma companies are going to charge “what the market will bear.” But, therein lies the problem: we don’t have an actual market for most of these drugs. Patents create monopolies, meaning a total lack of competition, which allows pharma companies to set monopoly rents. Combine that with the US’s arcanely bizarre healthcare system, where patients have no idea how much drugs cost, and everything is opaque because insurance companies maybe pay some of it, and patients might get totally random bills at some later date, and its easy for “the market” to no longer function the way a market should function.
But, at the very least, don’t just accept the claim that drugs cost a lot because pharma has to spend a lot on R&D. All of the evidence suggests that’s ridiculous.
Filed Under: drug prices, patents, pharma
from the as-obvious-as-obvious-can-be dept
The idea that there is a link between the exclusivity period on patents and higher drug prices is about as noncontroversial as a view can be. It is the easy question on an ECON 101 exam on monopolies, supply and demand. Yet, somehow, this has come under attack thanks to big PhRMA and their minions. Unfortunately they have found a sympathetic advocate in the Senate who believes the unbelievable.
Sen. Thom Tillis has taken a host of actions trying to unlink the obvious connection between patents and high drug prices, and he is trying to force both the FDA and the USPTO to agree with him that the link is a “ false narrative.” This assertion, of course, is ludicrous. Patents are the backbone of the pharmaceutical industry, and the reason why drug companies make significantly more than other large public companies. Patents give these companies a guaranteed monopoly period, in which monopoly profits are intended to reward them for the risk and investment spent in bringing new drugs to market. These monopoly periods eventually expire, as required by the constitution, and the resulting influx of competition lowers drug prices by about 80% on average.
This social contract is well understood, and almost everyone thinks this is good for society. So I will give Sen. Tillis the benefit of the doubt and interpret his statement as suggesting that there is no link between gaining an extra, and unintended, monopoly period and high drug prices. But even here the body of evidence to the contrary is extensive. I collected a lot of this evidence in a recent tweet thread. However, it is important to understand a little more about the background of what has quickly become an industry practice.
The story of patent thicketing starts with AbbVie. AbbVie created the patent thicket in much the same way Apple created the smartphone – there may have been others before, but none were as successful or as emulated since. AbbVie’s drug Humira was the best selling drug for almost 10 years, but they faced a problem. Internal estimates showed they would lose their exclusivity as early as 2017. They needed a strategy to stall generic entry for as long as possible, and they hired the extremely controversial consulting company McKinsey to help come up with a plan. While several strategies were presented, the patent strategy quickly became the most successful. As one biotech patent attorney put it: if you have a $16 billion-a-year drug, “every month is a good month that you’re on market alone. So you’re going to spend whatever it takes to be as aggressive as possible and get as many patents as possible.”
The strategy is simple even if it sounds like it should be impossible: find as many ways to patent an existing product as possible. This can include creating a staggered rollout of patent applications around formulations, dosing regimen, route of administration (for example, using the drug in an injector pen), dosing regimen for new indications (i.e. new diseases the drug can treat), and manufacturing processes. As one AbbVie internal document put it: “in the eye of biosimilar makers, how would they manufacture Humira?” AbbVie just needs to patent those manufacturing processes, even if they aren’t using them, and biosimilars won’t be able to make the drug.
All of these documents show that drug companies are trying to get new patents, with later expiration dates, on existing drugs for purely financial reasons. This alone proves Sen. Tillis wrong. But is there widespread failure of the patent system that demands a response? Again there is ample evidence that there is.
One study showed that 78% of new patents were associated with existing drugs, not new ones. The same study found that most of the companies who were successful doing this once would try again, with 50% becoming serial offenders. Another study found that most of the patents used to block generic and biosimilar entry represented minimal-to-no additional benefits to patients using the drug.
These delays have costs. One study found that Medicare spent an average of $109 million a year extra due to delayed generic entry. The main cause of delayed competition? Patent litigation. Another study found that one year of improved patent examinations on secondary and tertiary drug patents, to catch bad patents before they issue, saves $8.7 billion in the future. And when Humira went generic in Denmark in 2018, residents saw their prices drop by 82.8%. In the US we’ve faced regular price increases on Humira because it remains patent protected.
These abuses of the patent system may carry additional costs to innovation and safety. A recent study of R&D competition around Covid drugs found that whenever a firm finds it profitable to invest in developing a minor modification, R&D for radical follow-on innovation goes down. This could mean that the incentives created by the availability of patents for existing drugs may actually lower R&D investment in new drugs, as resources chase lower risk and more immediate profits. Some researchers have even found startling signs of negative innovation, or innovation that promotes riskier and less beneficial treatments. This happens when the better treatments are unpatentable. The study shows a company pursuing a treatment that overdoses patients because more appropriate doses were considered obvious under prior art. Overdosing, however, was patent eligible because it was considered non-obvious.
This evidence shows a widespread problem in need of a policy response. Indeed, those calling for reform now include the New York Times, the Department of Health and Human Services, former Trump cabinet member Alex Azar, and many researchers and public interest advocates. Whoever is advising Sen. Tillis on this issue needs to include the full evidence on drug prices and patents. Especially since the Senator appears to be engaging in good faith around efforts to improve patent quality and stop various abuses of the patent system. But without good information, I fear bad policy may result.
Matthew Lane is a Senior Director at InSight Public Affairs where he specializes in competition and IP issues.
Filed Under: biosimilar, drug patents, drug prices, economics, fda, generics, humira, monopolies, patent thicket, patents, thom tillis, uspto
Companies: abbvie
from the it's-a-scam dept
The House Oversight Committee recently launched an investigation into the giant consulting firm McKinsey, and its role in inflating drug prices as well as pushing opioids at every opportunity.
?Over the last decade, McKinsey & Company?one of the largest consulting companies in the world and a major U.S. government contractor?has engaged in a pattern of conduct that raises serious concerns about its business practices, conflicts of interest, and management standards,? wrote Chairwoman Maloney. ?The company?s support for drug companies pushing addictive opioid painkillers and raising prices for life-saving medications, even as McKinsey also advised the federal agency regulating their conduct, may have had a significant negative impact on Americans? health. McKinsey?s investments through an internal hedge fund?including in companies benefiting from opioid sales?also raise significant concerns about conflicts of interest.?
The opioid stuff is certainly scary, but more interesting to us at Techdirt is that the Committee also released a set of incredibly damning documents, of PowerPoint slides from McKinsey, presented to AbbVie execs about ways to jack up the prices on drugs, especially by bending over backwards to re-patent the same drug over and over again. Going through the slides is an exercise in observing pure evil. For all the talk of internet companies “putting profit over societal benefit” or whatever, these documents show deliberate planning by McKinsey to make sure that AbbVie drugs more or less bankrupt those who take them — often by blatantly abusing the patent system.
Some of the slides go back about a decade, at a time when the entire pharmaceutical industry was freaking out over its own failures to discover new and useful drugs that it could get monopoly rents over. Rather than building a nice sustainable business with nice sustainable margins, the pharma industry, over the last few decades, has focused on squeezing ridiculous monopoly rents out of the public by abusing patent laws. And, of course, you’ll hear that they need to do this to pay for all the research and development, and all the costs of trials and whatnot. Except nearly all those claims are bullshit.
Stories abound about the billions of dollars that it costs to develop a new drug — except studies have shown those numbers are massively inflated (a drug that the pharma firm claimed cost $1.3 billion to develop actually cost the firm only $55 million). Much of the actual costs (and research and work) are done by universities or through public funding from NIH and NSF. But all of the profits go to the big pharma companies.
But what McKinsey and AbbVie did with Humira is truly nefarious. As the presentations show, AbbVie (and its predecessor, Abbott) was terrified of facing any competition for Humira, a biologic drug that is used by many to treat arthritis, Crohn’s disease, and other diseases. Apparently it costs around $84,000 a year, though that link claims that if you’re lucky, perhaps insurance will lower that cost to just $60k. That same page claims the reason it costs so much is:
One of the reasons that Humira is so expensive is because it?s a complex medication to make. DNA technology must be used to create proteins for the drug?a process that can?t be replicated, unlike with synthetically manufactured medications.
Except, these internal documents from McKinsey tell a very, very, very different story. McKinsey and Abbott knew that other competitors entering the market would cut the price of Humira significantly:
The project was pitched as a way to assess this competitive threat and to look for ways to limit it, but throughout the report you see winks and nods towards abusing patent law to stop the competition, as well as pretending that biosimilar competition was somehow unsafe:
Note that the two items that actually might benefit the public: lowering prices and competing… are at the bottom of the list.
But what McKinsey really seems to love is this idea of “formulation change” to both extend the effective patent life of a drug… and to boost the cost, claiming that these “innovations” allow them to jack up the cost:
And, if you think maybe that doesn’t matter because the earlier version will go off patent, the way the scam works is that you get the pharma company to phase out entirely the older formulation a few years before the patent runs out, forcing patients to move onto the newer formulation. Thus, when the patent runs out on the earlier version, Pharma tells everyone that it would be a “step backwards” to go with a generic or biosimilar of the “earlier” formulation.
From there, the slides shift to a year later, when McKinsey is really all in on trying to find ways to reformulate Humira and extend the patent life (and the ability of Abbott to jack up prices). The slides make little attempt to hide the fact that this is all about protecting Abbott’s profits, not making anyone’s lives better. The presentation shows that McKinsey set up an internal incentive program to try to get various Abbott scientists to suggest any kind of ideas for how to patent new formulations of Humira to extend the patents covering it:
They don’t even hide the fact that this is entirely an effort to “broaden our Humira patent estate in response to Biosimilars.” It’s got nothing to do with improving things for customers. It’s about keeping drug prices high way beyond the expiration of the original Humira patents.
And what do Abbott/AbbVie scientists get for selling their soul and deliberately keeping prices of life-saving drugs way too high for most people? Apple devices. This is why they pay McKinsey the big bucks. They set up a program in which Abbott scientists would get an iPhone if they had an idea on how to extend Humira’s patents, an iPad if those ideas turned into an actual patent applications, and (yup) you’d get a Mac computer if the patent was actually granted:
There’s much more in the presentation, and Tahir Amin from I-MAK Global has an even more in-depth Twitter thread about this nonsense.
And… in an interesting bit of timing… just a week or so after the House Oversight Committee released these incredibly eye-opening documents, the Institute for Clinical and Economic Review released a big report detailing how recent US drug price increases are not supported by new clinical evidence. And guess which drug tops their list of the drug price changes having (by an order of magnitude) the most impact on how much people had to spend? Humira.
The report shows that because of unsubstantiated price increases on Humira, Americans spent an unnecessary extra $1.4 billion on Humira, thanks to a 10% increase in net price on a drug that a decade ago everyone (including Abbott and McKinsey) knew was facing the expiration of its patents, as well as expected competition from biosimilars.
As ICER noted in its release, in other countries, where Humira is actually facing biosimilar competition, prices are falling:
?While prescription drugs continue to arrive in the US with increasingly high launch prices ? often not aligned with those therapies? ability to improve patients? lives ? year-over-year price increases have slowed considerably since ICER began issuing these UPI reports,? said David Rind, MD, ICER?s Chief Medical Officer. ?However, there remain many high-cost brand drugs that continue to experience annual price hikes, even after accounting for their rebates. The most extreme of these is Humira, with an ever-escalating US price that contrasts starkly to its falling price in every country where Humira currently faces biosimilar competition. Even more concerning, several of these treatments have been on the market for many years, with scant evidence that they are any more effective than we understood them to be years ago when they cost far less.”
To McKinsey consultants and AbbVie scientists: were those iPhones worth it?
Filed Under: competition, consultants, drug prices, humira, patents
from the drug-prices-are-a-patent-problem dept
As Democrats struggle to bring together 50 votes to pass the Build Back Better Act, a major sticking point with the legislation has emerged. That is, whether it should include provisions changing the law to allow Medicare to negotiate drug prices, with caps on payments set based on prices paid by other wealthy nations.
Concerns about such an extensive, centralized program are not unreasonable. On the other hand, patent reform is a market-friendly approach that embraces the benefits of competition and free entry to cut costs and better align the incentives for new drug development.
Negotiation would indeed take a bite out of drug prices. Analyses of proposed drug price negotiation plans find savings around half a trillion dollars over ten years. That’s serious money needed for the bill to pass reconciliation. But there’s more than one way to achieve this and bring down drug costs. To that end, patent reform would be a much more worthwhile endeavor.
The savings needed don’t have to come from drug price negotiation. For that matter, the popularity of such a provision doesn’t come from the specific policy. Rather, it’s popular because it means lower drug prices. Drug price negotiation is a policy with potential (though melodramatically overstated) harms. Well-designed patent reform, on the other hand, can trim prices while better orienting drug development.
Drug price negotiation isn’t a riskless proposition. The Congressional Budget Office estimated that a significant reduction in revenue would reduce new drug discovery by 3-5 percent (8 to 15 fewer drugs out of an estimated 300 approved). Market size and the potential return inform the decision to invest ( or not) in R&D. As the largest prescription drug market in the world, the U.S. isn’t just the arsenal of democracy; it’s also the medicine cabinet. Negotiation will bring down prices and the return on investment for new drug discovery without the benefits of a competitive market created by patent reform.
If savings is the goal, going after drug patents is the best way to achieve that. Dean Baker found that patent protections added over $300 billion per year to the price of pharmaceuticals in 2018. According to the FDA, the entry of one generic competitor reduces drug prices by 40 percent, increasing to a whopping 95 percent of the original price when there are six or more generic competitors.
But aren’t patents necessary to ensure a return on the enormous investments needed to develop a new drug? Generally yes, even if the costs of such investments are overstated. But it’s possible to have too much of a good thing and, unfortunately, that’s where we are today. Analysis by the Initiative for Medicines, Access, and Knowledge (I-MAK) reveals that the effective patent terms for the top-selling drugs in the U.S. are nearly twice as long as the 20 years patents are supposed to last. Drugmakers pull this off by loading up dozens of patents per drug, including ones for therapeutically trivial changes (like going from two pills to one pill a day). As a result, they can continue to charge sky-high prices long past the point when they should be facing real competition. Reforms are needed to change the incentive structure that makes extending monopolies more profitable than developing new treatments.
Raising the bar for patent eligibility is a structural reform to ensure quality. But what if the holders of good patents still abuse their exclusivity? In these cases, there are tools available to the federal government to license the patents needed to legally manufacture drugs (that is, allow competitors into the market).
The first is march-in rights under the 1980 Bayh-Dole Act, which helps “subject inventions”–those made under a government contract–to be licensed. Since this power has never been utilized, its usefulness in fighting high prices is technically an open legal question. Still, there’s no time like the present to find out. Even without march-in rights, the government can use other compulsory licensing powers to pay a reasonable royalty while reaping the benefits of low costs under free-market competition.
There are two ways to fight monopoly power: with the bargaining power of a large, centralized buyer like the federal government or with increased market competition. Drug price negotiation takes the former approach, and there’s a place for it. But whenever an opportunity to pursue the latter is possible, we should take it. Making sure the incentives created by the patent system don’t turn into excesses will cut costs and ensure the rewards of a patent go to innovative activity.
Daniel Takash is the Niskanen Center’s regulatory policy fellow.
Filed Under: build back better, drug prices, patents
from the patent-quality-week dept
This post is one of a series of posts we’re running this week in support of Patent Quality Week, exploring how better patent quality is key to stopping efforts that hinder innovation.
Patents are increasingly a hot topic in drug price policy conversations. So much so, that one might wonder if this newfound attention is deserved. For example, a recent Senate Judiciary Subcommittee hearing examining anticompetitive conduct in prescription drug markets ended up focusing heavily on Pharma?s blatant abuse of U.S. patent laws. Indeed, it seemed at times that patent thicketing had eclipsed the many other anticompetitive ?shenanigans? that Pharma uses to delay competition.
So why is there such a growing spotlight on patents?
First, it?s important to realize just how big the drug price problem is. Prescription drug spending remains a critical issue in the United States as millions of American patients and the U.S. healthcare system struggle to keep pace with the growing price tag for medical innovations with limited financial reprieve from low-cost alternatives. In 2020, the total US drug spending was estimated at $358.7 billion and the Centers for Medicare & Medicaid Services (CMS) projects national spending on healthcare to reach $6.2 trillion by 2028 ? the bulk of the cost resting on shoulders of the federal government and American households (mainly through taxes and insurance premiums).
One of the key drivers of these rising costs are the habit of drug makers of blocking competition on older drugs that have proven themselves to be blockbusters. And the best modern strategy for doing that is creating a patent thicket. As Committee Chairman Senator Dick Durbin (D-IL) pointed out, ?[T]he top-12 best-selling drugs in America each have an average of 71 patents and 78 percent of all new patents are for drugs that are already on the market.?
The reason behind this is two-fold. Older tactics have had successful antitrust cases filed against them, but patent thicketing is somewhat protected by the Noerr-Pennington Doctrine which states that (except for some limitations) people can petition their government even for anticompetitive reasons. That means it is up to the government to resist anticompetitive gaming of its regulations. The second reason is that the patent office is failing at just that. Dr. Rachel Moodie, vice president for Biosimilars Patents and Legal for Fresenius Kabi, a leading health care company, gave testimony stating, ?[W]e see the U.S. Patent system as being an outlier now compared to other systems around the world? the way that the patent system is working right now is that it?s easy to circumvent certain rules that allow you to repetitively claim a similar invention over and over again.?
What is the result of this patent thicketing?
Drug manufacturer AbbVie has filed over 240 patent applications for a single drug, Humira, and received over 130 granted patents. ?This patent thicket has allowed Humira to control the marketplace in the U.S., leading to Humira claiming the number 1 spot as the world?s bestseller since 2012 ? while other countries have had access to more affordable biosimilars. AbbVie itself has had to cut prices by 80% in some markets due to competition.
AbbVie isn?t alone. A study by I-MAK found the practice of patent thicketing pervasive among the top 12 best selling drugs by revenue.
Just how big of a deal is patent thicketing?
The 2020 US revenues of just three drugs ? Humira, Enbrel and Revlimid ? represent 8.2% of total drug spending in that year. All three of these drugs should be facing competition now or be close to the end of their monopoly terms. They were approved in 2002, 1999, and 2005 respectively. Patent terms only extend 20 years and drugs have historically averaged a little over 14 years of protection on the market due to the length of the approval process (this includes patent term restoration passed by Congress to give some of this time back). Humira has a deal with biosimilar manufacturers that allows them to come to market in 2023, but Enbrel and Revlimid?s final patents don?t expire until 2029 and 2036. Add Imbruvica, a drug we could have seen competition this decade but won?t, and just those four drugs represent almost 10% of all US drug spending.
Competition, on the other hand, works when allowed to. A list by Fierce Pharma of the top 20 drugs by worldwide sales in 2020 indicates just how well competition works to lower the price of some of Big Pharma?s most sought after drugs. As competition from biosimilars and generics hits the marketplace, sales of the industry?s top performing drugs correspondingly drop. For example, as competition emerged against Johnson & Johnson?s ulcerative colitis drug, Stelara, the company had to cut its prices to remain competitive. The same report by Fierce Pharma also anticipates the number two drug, Keytruda, soon taking over the number one spot as Humira?s patent is expiring in 2023, opening it up to competition by biosimilars.
What does this have to do with patent quality?
Drug patent thickets are largely made up of low quality patents whose applications were only filed because of the benefit they provide in keeping competition away from top selling drugs. This means that any patent quality efforts are also efforts to reduce drug prices. For example, the USPTO?s inter partes review process (IPR) has been instrumental in cancelling low-quality patents and allowing new drug competition. This is one of the best tools created by the America Invents Act to cut through these dense patent thickets. IPRs were substantially weakened under the last administration, but a Congress that cares about drug pricing could restore and strengthen this tool to great effect.
Matthew Lane is the executive director of the Coalition Against Patent Abuse
Filed Under: drug prices, patent quality, patent quality week, patents
from the this-is-fucked-up dept
Two years ago, we wrote about a stunning (and horrifying) study that explained how patents deeply contributed to the opioid crisis. It described the lengths that drug companies — including OxyContin maker Purdue Pharma — went through to block any and all generic competition. It was quite a story.
However, on a recent episode of Terry Gross’s “Fresh Air” she interviewed medical bioethicist Travis Rieder about his new book, In Pain. It tells the story of how, even as a “medical bioethicist,” Rieder himself got addicted to opioids after being in a severe motorcycle accident — and then was shocked to find that none of his doctors either knew how or cared enough to help him get off the painkillers. The story is fascinating — and harrowing.
Deep into the discussion, however, one part caught my attention. Rieder tells a story about how, rather than putting him on opioids, they could have just given him acetaminophen:
GROSS: One of the pain killers that you were given when you were in the hospital was intravenous acetaminophen. And you thought that that was really, surprisingly effective as a painkiller, but you were only given a few doses, even though you kind of begged for more more because it was effective and not habit-forming. So why couldn’t you get more of it?
RIEDER: Yeah, this is such a wild story. I didn’t know for a long time, and so all I had was this immediate experience where, after that fifth surgery, when I was really behind the pain, the pain management team upped all of the doses of everything I was on, but then also gave me three doses over 24 hours of IV acetaminophen. And for me, the way I described it at the time, it was as good as morphine in the short term, but it didn’t knock me out. It didn’t sedate me. I didn’t have to worry about my breathing. And so I really liked it for that reason, and I asked for more.
And I remember one of the residents being kind of hesitant – you know, one of these young doctors in training – and kind of mumbling something about, I don’t think you can have more because of your liver, or something. I didn’t question it.
But, turns out, it’s got nothing to do with his liver:
Months later, I’m an invited speaker at an anesthesiology conference, and I’m hanging out with some of the docs over a coffee break. And I’m telling them the story because I’m like, hey, I’ve got these, you know, really smart people. I’m going to pick their brains. And I get to the point where the resident mumbles this excuse to me, and they all chuckle. And I look at them, and I say, what? Is that not the reason? And I can tell in that moment that they all know something and that they all know that they all know. And one of them looks up at me and says, they’re not giving it to you because it’s too expensive.
(Laughter) And my mind was blown. I was like, wait a minute – what do you mean it’s too expensive? It’s just Tylenol, right? They said, yeah, but the IV form is still on patent. And so once it goes off patent, it’ll be standard of care because it works great. But, you know, for now, it’s too expensive, so most of us have hospital orders not to use it.
So, let’s get everyone hopped up on addictive and destructive opioids, because this form of Tylenol is still on patent. That’s just great. He continues:
I think what it started for me was a dive down the rabbit hole of, how does money play a role in how we treat pain and how we overutilize opioids for pain, right? Because what it made really clear is that opioids are dirt-cheap because a bunch of them have been off patent for decades, and that these other sorts of therapies can be really expensive.
For all the talk of how patents create incentives for new life-saving medicines, it’s important to recognize that they create some pretty fucked up incentives at times as well.
Filed Under: acetaminophen, drug prices, healthcare, opioids, pain medicine, patents, travis rieder
from the monopolies-make-people-do-fucked-up-things dept
Over at Quartz, there’s a very interesting article about how patents may have contributed to the opioid crisis in the US. It’s based on a recent paper, May Your Drug Price Be Ever Green, by law professor Robin Feldman (who has done lots of great work about problems in our patent system) and law student Connie Wang.
For many years, we’ve written about how the pharmaceutical industry has become so overly reliant on patents for their business model, that’s it’s become destructive. We’ve argued that the misaligned incentives of the patent system, especially in pharmaceuticals has so distorted incentives that the big drug companies basically have become focused solely on keeping exclusivity that it has lead to a lot of tragic game playing, where the cost has literally been people’s lives. This went into overdrive a decade or so ago when big pharma realized that many of their biggest sellers had patents expiring, and their pipeline had failed to come up with new drugs to replace the monopoly rents of the old. This resulted in all sorts of gamesmanship designed to allow big pharma to retain monopoly rights even after a drug should have gone off patent. This included pay for delay schemes, whereby big pharma effectively paid off generic makers to keep them out of the market for longer.
And then there’s the trick of making basically the same drug, but with just a slight, non-essential change, and getting a patent on the new drug. Of course, you might wonder why that would stop people from moving to generics. There are all sorts of games played over this, including misrepresenting the “new” drug as somehow better, or even tarnishing the reputation of the old drug for no other reason than to drive people to the new one. Or, a really nefarious trick: stop selling the older drug a little while before it’s gone off patent, to effectively force patients who need it onto the new drug, making it much less likely they’ll go to the generic copy of the old drug, since there’s a big gap in when it was available.
Another trick is Big Pharma threatening doctors for prescribing generics.
Basically, if there’s been some sort of sleazy underhanded way to make people pay more for drugs than they really should, Big Pharma companies have probably done it. And that takes us back to Feldman and Wang’s study. Basically it puts some numbers to the anecdotes and examples we’ve talked about over the past few years:
This study examines all drugs on the market between 2005 and 2015, identifying and analyzing every instance in which the company added new patents or exclusivities. The results show a startling departure from the classic conceptualization of intellectual property protection for pharmaceuticals. Key results include: 1) Rather than creating new medicines, pharmaceutical companies are recycling and repurposing old ones. Every year, at least 74% of the drugs associated with new patents in the FDA?s records were not new drugs coming on the market, but existing drugs; 2) Adding new patents and exclusivities to extend the protection cliff is particularly pronounced among blockbuster drugs. Of the roughly 100 best-selling drugs, almost 80% extended their protection at least once, with almost 50% extending the protection cliff more than once; 3) Once a company starts down this road, there is a tendency to keep returning to the well. Looking at the full group, 80% of those who added protections added more than one, with some becoming serial offenders; 4) The problem is growing across time.
And what does that have to do with the opioid crisis? Well, Purdue Pharmaceutical, the makers of OxyContin — the key drug that’s at the heart of the crisis — has messed with the formulation of OxyContin 13 times to effectively “extend” the patent. Some of these may have good intentions behind the modifications, such as the changing of OxyContin to “abuse proof” pills that are much harder to crush and snort. But, as the Quartz article notes, the constant revamps of the formula and the extending of the patent cliff allowed Purdue to continue promoting the drug. And, famously, Purdue got tons of people hooked on OxyContin by falsely claiming that it was non-addictive. The story of the rise of OxyContin and the false marketing involved in its success is legendary and has been written about in academic papers and the press over and over again. Indeed, the New Yorker just did a giant article on the rise of OxyContin and the dark legacy of Purdue Pharmaceutical’s aggressive and misleading marketing. The short summary from that article:
Purdue launched OxyContin with a marketing campaign that attempted to counter this attitude and change the prescribing habits of doctors. The company funded research and paid doctors to make the case that concerns about opioid addiction were overblown, and that OxyContin could safely treat an ever-wider range of maladies. Sales representatives marketed OxyContin as a product ?to start with and to stay with.? Millions of patients found the drug to be a vital salve for excruciating pain. But many others grew so hooked on it that, between doses, they experienced debilitating withdrawal.
Since 1999, two hundred thousand Americans have died from overdoses related to OxyContin and other prescription opioids. Many addicts, finding prescription painkillers too expensive or too difficult to obtain, have turned to heroin. According to the American Society of Addiction Medicine, four out of five people who try heroin today started with prescription painkillers. The most recent figures from the Centers for Disease Control and Prevention suggest that a hundred and forty-five Americans now die every day from opioid overdoses.
That part about how it led many to switch to heroin, because OxyContin is too expensive? Well, that all goes back to patents. Obviously Purdue held the key patent on OxyContin for a while, but that expired in 2013. And yet, four years later, there still aren’t generics to take its place. As the Quartz article explains:
The company is still profiting off ?abuse-deterrent? OxyContin. Though there are currently ?authorized generics? of OxyContin available, these are made by manufacturers with licenses to use Purdue?s formula. In other words, Purdue makes money off them. And there are currently no approved abuse-deterrent generics in the US. In September of this year, FDA commissioner Scott Gottlieb said that soon the agency plans to issue guidelines to assist companies who are trying to file applications for these types of generics. No word on when that document will be published, however.
Obviously, this is not the sole reason — or perhaps even a major reason — behind the opioid crisis. But it has clearly contributed to it. Purdue Pharma certainly deserves much of the blame for everything its done. And it took doctors way too long to realize the problems and risks of these drugs. But the artificially inflated prices of OxyContin, driven not just by patents, but by the games played by Purdue and other pharma companies, certainly helped keep the prices ridiculously high, often driving people to heroin or other, even more dangerous opioids.
Filed Under: connie wang, drug prices, monopolies, opioids, patents, pharmaceutical companies. oxycontin, robin feldman
Companies: purdue pharmaceutical
from the that's-not-how-it-works-at-all dept
While Congress is still doing its thing to try to make the US healthcare system an even bigger laughingstock around the world, the White House is apparently considering an executive order targeting high drug prices. Of course, it handed this power over to Joe Grogan, a (very recent) former lobbyist for a giant pharma company, Gilead, that has been at the center of some controversy over its highly priced drugs. Grogan is apparently leading this effort despite not having an ethics waiver, which means he’s supposed to recuse himself from these discussions, rather than lead them. But, you know, that’s not happening in the swampy, swampy waters of Washington DC. So just what would Grogan suggest as a way to lower drug prices? How about extending pharmaceutical patents? Yes. Extending.
The documents reveal behind-the-scenes discussions influenced by the pharmaceutical industry. Joe Grogan, associate director of health programs for the Office of Management and Budget (OMB), has led the group. Until March, Grogan served as a lobbyist for Gilead Sciences, the pharmaceutical company that priced its hepatitis C drugs at $1,000 per pill.
To solve the crisis of high drug prices, the group discussed strengthening the monopoly rights of pharmaceuticals overseas, ending discounts for low-income hospitals and accelerating drug approvals by the Food and Drug Administration. The White House declined to comment on the working group.
In what world does anyone with even the slightest economic knowledge think that extending/expanding monopoly powers would bring prices down rather than up? Want to know one of the reasons why drugs are so crazy expensive right now? It’s because those monopoly rights have already gone way too far. If you want lower prices, you want competition in the market, not monopoly suppliers who know they’re dealing with major health issues — and the willingness of insurance companies to pay through the nose.
You can criticize all sorts of things about the way healthcare is handled in this country, or how drug prices are determined. But, it’s impossible to see how anyone with a straight face could possibly claim that increasing patent rights would lead to lower prices. Of course, the argument here is effectively that by making patent powers greater overseas, the big pharma companies can milk foreigners for higher drug prices… which would make it easier for them to drop drug prices at home. Here are the details from the report:
Extending the patent life of drugs in foreign markets to ?provide for protection and enforcement of intellectual property rights.? This will ensure ?that American consumers do not unfairly subsidize research and development for people throughout the globe.?
Except, raise your hand if you think that drug companies would voluntarily lower drug prices in the US, just because they can now also price gouge sick people in other countries? Yeah, didn’t think so. If you want to lower drug prices, the way to do it is to cut back the monopoly powers of Big Pharma so that they’re actually forced to compete more. This isn’t a theoretical or academic claim. Just look at the price of drugs after one goes off patent. They immediately drop. Want cheaper drugs? Ditch the patents and watch the market do its thing.
Filed Under: drug prices, drugs, enforcement, joe grogan, omb, patents, pharmaceuticals
Companies: gilead sciences
from the public-health,-public-domain dept
Techdirt has written a few times about the pharmaceutical industry’s use of “ evergreening“, whereby small, sometimes trivial, changes are made to drugs in order to extend their effective patent life. It turns out the technique is applied to one of the most widely-used drugs of all, insulin:
There are currently about 387 million people worldwide living with diabetes. Meanwhile, as discussed by Jeremy A. Greene and Kevin R. Riggs in their March 2015 article in the New England Journal of Medicine, there is no generic insulin available on the market despite great demand in poorer communities and regions of the world. As a result, many go without insulin and suffer complications including blindness, cardiovascular disease, amputations, nerve and kidney damage, and even death. Pharmaceutical companies patent small modifications to previous insulins while withdrawing those previous versions from the market to keep prices up.
The obvious solution is to produce a generic version of insulin that can be sold cheaply enough that nobody dies or suffers complications simply because they cannot afford Big Pharma’s hefty price tags. That’s just what the Open Insulin project, with its crowdfunding page, aims to do:
A team of biohackers is developing the first open source protocol to produce insulin simply and economically. Our work may serve as a basis for generic production of this life-saving drug and provide a firmer foundation for continued research into improved versions of insulin.
As well as making insulin more readily available to those in the poorer communities, the Open Insulin project could save Western countries huge sums too. As an article in Popular Science explains:
Since there are no generic versions available in the United States, insulin is very expensive — that cost was likely a large proportion of the $176 billion in medical expenditures incurred by diabetes patients in 2012 alone.
Any project that could help save thousands of lives and billions of dollars would be noteworthy. What makes Open Insulin even more remarkable is that it is operating on a shoestring — the initial crowdsourcing target was just $6,000, already surpassed — and that it intends to put all its results in the open:
All protocols we develop and discoveries generated by our research will be freely available in the public domain. We will also be proactively investigating strategies to protect the open status of our work.
However, it’s important to keep those exciting prospects in perspective. The Popular Science article includes a comment from the Kevin Riggs mentioned in the Open Insulin quotation above. He doesn’t believe that Open Insulin on its own will be enough to bring a generic insulin drug to the market:
“I don’t think the major hurdle is that the companies don’t know how to make insulin, because that part is reasonably straightforward,” he says. “The real hurdles are getting the drug approved by the FDA (and since insulin is a biologic drug, it requires a lot more original data than an application for a small-molecule generic would), and then upfront manufacturing costs (because making a biologic drug is different, so it requires different equipment).” He suspects that it will take “an altruistic entity with a lot of start-up money” to make generic insulin commercially available.
That may be so, but at least the Open Insulin project is doing something in an attempt to change the status quo that sees huge numbers of people suffering unnecessarily. In any case, Open Insulin is a wonderful demonstration of how much biohacking has advanced, allowing suitably-skilled people to make potentially important contributions to global health. Let’s hope it does eventually lead to a generic insulin that can be made available around the world very cheaply.
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Filed Under: big pharma, diabetes, drug prices, generic insulin, insulin, open insulin, patents, pharmaceutical pricing