I was surprised, given AS's support of "drug companies", to see him cite this:
we find that the economic losses resulting from the grant of substandard patents can reach $21 billion per year by deterring valid research with an additional deadweight loss from litigation and administrative costs of $4.5 billion annually. This brings the total deadweight loss created by our “dented” patent system to be at least $25.5 billion annually.
Here's more:
But in recent years, major pharmaceutical companies have gotten greedy. Instead of being satisfied with their 20-year monopolies on new drugs, they have tried to prevent competing manufacturers from using their recipes to make cheaper versions of their drugs.
One approach is to apply for a secondary patent on drugs whose recipes are about to enter the public domain, citing a new formulation, a new pill form, or new packaging. When a generic drug maker tries to bring its version of a brand name drug to market, the original manufacturer sues under the Hatch-Waxman Act, which provides for an automatic 30-month delay while a court sorts out the "new" patent issues. Last summer the Federal Trade Commission (FTC) highlighted several cases in which pharmaceutical companies have brought serial lawsuits, prompting a succession of 30-month delays.
A particularly egregious example of how this works is the ploy used by the Anglo-Swedish pharmaceutical company AstraZeneca to thwart the introduction of generic versions of its blockbuster anti-heartburn medication Prilosec, the patent for which expired a year ago. AstraZeneca, attempting to extend its monopoly, filed a new patent claim describing how Prilosec could be sprinkled on applesauce for use by patients who have trouble swallowing pills. Under Food and Drug Administration (FDA) rules, this meant that would-be generic competitors would have to prove that their versions would behave the same way when sprinkled on applesauce. Overcoming this hurdle will require more testing and cause more delays, preventing patients who can swallow pills from getting cheaper drugs.
The result of such tactics, as President Bush noted Monday, is that "these delays have gone on, in some cases, for 37 months or 53 months or 65 months."
Considering that every month that AstraZeneca can maintain its monopoly on Prilosec earns it $250 million, the urge to scam the system is irresistible.
One approach is to apply for a secondary patent on drugs whose recipes are about to enter the public domain, citing a new formulation, a new pill form, or new packaging. When a generic drug maker tries to bring its version of a brand name drug to market, the original manufacturer sues under the Hatch-Waxman Act, which provides for an automatic 30-month delay while a court sorts out the "new" patent issues. Last summer the Federal Trade Commission (FTC) highlighted several cases in which pharmaceutical companies have brought serial lawsuits, prompting a succession of 30-month delays.
A particularly egregious example of how this works is the ploy used by the Anglo-Swedish pharmaceutical company AstraZeneca to thwart the introduction of generic versions of its blockbuster anti-heartburn medication Prilosec, the patent for which expired a year ago. AstraZeneca, attempting to extend its monopoly, filed a new patent claim describing how Prilosec could be sprinkled on applesauce for use by patients who have trouble swallowing pills. Under Food and Drug Administration (FDA) rules, this meant that would-be generic competitors would have to prove that their versions would behave the same way when sprinkled on applesauce. Overcoming this hurdle will require more testing and cause more delays, preventing patients who can swallow pills from getting cheaper drugs.
The result of such tactics, as President Bush noted Monday, is that "these delays have gone on, in some cases, for 37 months or 53 months or 65 months."
Considering that every month that AstraZeneca can maintain its monopoly on Prilosec earns it $250 million, the urge to scam the system is irresistible.
I don't think of myself as trying to socialize 'big pharma', and I'm very uncomfortable with the government getting involved in setting prices, but if the above piques your interest, put some time aside to skim through this, from NY Review of books:
And the magic words, repeated over and over like an incantation, are research, innovation, and American. Research. Innovation. American. It makes a great story.
But while the rhetoric is stirring, it has very little to do with reality.
But while the rhetoric is stirring, it has very little to do with reality.
Many large drug companies have a wonderful history and culture and reputation, on the R&D side (including Merck, despite the Vioxx mess), deservedly so. There is no reason that cannot be preserved while still thinking about ways to innovate how we make and sell drugs to ourselves.
