If big pharma charged ridiculous amounts of money for new drugs, made off-patent drugs dirt cheap, and didn't find new & ridiculous ways to re-patent old drugs, I'd feel better about their business model.
I imagine you’re correct, but could you source ‘re-patent old drugs’?
My understanding was that the drug owner had a 7 year exclusive window before the drug was released to public domain. At which point I would’ve expected the drug to be sold near cost.
If it’s possible to re-patent a drug, then obviously that process would break.
FWIW, 7 years of high prices in exchange for having the drug forever afterward feels like a theoretically good solution to me.
Exhibit A: Vimovo. One pill, consisting of two drugs that have been around for decades, and are available over the counter at any pharmacy. If bought separately, a month’s supply of these drugs would run you maybe $40, at most.
Vimovo, on the other hand, is routinely charged to insurers by pharmacies at prices ranging to over $3,000 for a month’s supply. And somehow insurers are willing to pay for it, to the tune of nearly $500 million a year. More details here from ProPublica: https://www.propublica.org/article/horizon-pharma-vimovo-com...
I suspect that something very fishy is going on between when the money is “paid” by the insurance company to the money that actually makes it to the pharmaceutical company. I suspect most of this money gets rebated back to the insurer in some form or another.
Reading your link it’s actually an interesting story of an absolute fraud designed to thread a perfect path through all the existing regulations and checks & balances.
There have been a lot of fishy dealings with the drugs that came from Valeant.
They would charge outrageous prices for drugs that were just a combination of generics.
They funneled the scripts to a pharmacy they partnered with. Most insurers would not cover the drug, but the pharmacy knew all the tricks. 80% of claims might get rejected, but they made a ton of money off the 20%.
Which is why ACA also instituted marketplaces and insurance standards, so that competition across substitute services keeps premiums competitive.
E.g. Anthem is more than free to double the premium on their bronze plan to increase net profits, but then customers are free to swap in bronze plans from Cigna, Kaiser, or any number of competitors that didn't.
Regarding the ACA, as I understand it, there's the 80/20 rule that states insurers must spend 80% of what they make from premiums on providing & improving healthcare. [1]
The problem with that is there's no cap on what premiums should be. So if you charge 10K in premiums, and keep 2K, there's nothing in the ACA that is preventing you from raising your rates to 15K to keep 3K.
Please correct me if I misunderstand how this works.
Doesn't the same argument apply to the elements making any drug? Carbon, oxygen, etc.. are all pretty cheap. But there is significant value in mixing things properly and getting that mixture tested and through the FDA.
If it's trivial to take these cheap drugs and mix them, then why don't people simply do that?
Check out the propublica piece. Their analogy is more akin to putting pb&j in one jar. As to why it happens? People are likely to do what their doctors say and what their insurance will cover. Pharma has ways to influence both.
Your understanding would be correct, except when there are billions of revenue on the line. Then "the best minds" of the law profession get to work. For example, you cannot make a generic without (legally) having some sample of the drug going off patent. The drug company simply destroys all the expiring patent version of the drug, patents a minor change, and starts the clock all over again. Many other strategies are detailed in this podcast episode.
The biggest thing they do is file multiple patents for different parts of a drug. So they can have a 100 or so patents on a single drug and have the patents staggered over time. (Humira is a good example of this)
If that doesn't work they slightly alter stuff like dosage per pill and re-patent that.
That doesn’t work because the original pill is itself prior art to every patent as of the date it’s released. So you either claim priority to the first batch of patents, or your later patent is defeated by your own prior art. Same thing with changing the dosage. Even if you can show a new discovery that wasn’t obvious from the original patent, that doesn’t prevent anyone from making a pill with the original dosage.
The way this works in practice is that there is a stream of patents on incremental improvements. Doctors continue to prescribe the branded, patented drug (because they have no reason not to) even though the original drug was fine.
Insulin is like this. If there was a substantial market for the 1923 bovine insulin produced by Eli Lilly, it would be cheap. Instead, insurance is willing to cover the high prices of newer, incrementally better versions. Leaving a relatively small market for a worse, but patent free version.
You could, if you were dealing with a new chemical entity and were so inclined, file a new application with human pharmacokinetics claims, and then elect the PK patent for your FDA-assisted patent term extension. An excellent choice, since the PK claim patent will likely have the most recent priority date.
Indeed, there is market for it, and it is actually very cheap ($25 for a vial in Walmart, which typically lasts around a month). The problem with it is that it’s much more inconvenient and difficult to use correctly. The modern analogues are much superior, so most people prefer to go for those instead, despite much greater price.
One small wrinkle: what if there's an old existing compound that seems to work well for an different indication than it was originally approved for? It would be good to run the phase 3 trial (possibly phase 2 as well) but that's gonna cost a ton of money. Maybe the government does it, or maybe we let people extend a patent for a new indication, freeing up government research money for the much trickier problem of understanding fundamental disease mechanisms.
There are of course good arguments against, but there's at least some good arguments to allow limited patent extensions.
Basically anyone can apply to the NIH for a grant to run clinical trials. It's not easy: the funding rate for NIH grants in general is in the teens and you'll need to convince the reviews that a) the trial itself generally makes sense and b) you, specifically, can pull it off, but it can be done.
If you find a new use for an existing drug—and run a trial to prove it—the FDA will give you a period of "marketing exclusivity", wherein you will be the only one allowed to market that drug for that condition. It's not quite a patent, but it's meant to be a similar recompense/reward for doing the research.
big pharma charged ridiculous amounts of money for new drugs, made off-patent drugs dirt cheap
That’s what happens now, for the most part. Drugs that were cutting edge 7-10 years ago are now public domain and damn cheap, like 95-97% discount to the brand name.
Of course there are exceptions, but it’s generally how it pans out.
The insulin of today is not the same insulin from 10 years ago.
The insulin from 30 years ago is available and cheap, but no one wants to use it because the newer insulins make it easier to control your blood sugar.
My understanding was that the drug owner had a 7 year exclusive window before the drug was released to public domain. At which point I would’ve expected the drug to be sold near cost.
If it’s possible to re-patent a drug, then obviously that process would break.
FWIW, 7 years of high prices in exchange for having the drug forever afterward feels like a theoretically good solution to me.
Caveat: I know very little about this. ;)