How Big Pharma’s anti-competitive practices drive up costs for everybody, while at the same time stifling the R & D that high drug prices are supposed to fund.
By now, most Americans understand that generic drugs and other biosimilars are not only safe, but tried-and-true.
About three-quarters of the medications Americans take are generics, and because generic drugs can be as much as 95% cheaper than their branded counterparts, patients can often save hundreds, and sometimes thousands of dollars at the pharmacy counter, just by requesting a change.
It goes without saying that the big pharmaceutical companies do not like the competition that comes from generic clones of their blockbuster drugs. As such, they have established a set of strategies, known collectively as “evergreening” and “thicketing” designed to extend those patents.
The result: from 2005 to 2015, 78% of the drugs associated with new patents in the FDA’s records were not new drugs coming on the market, but existing drugs. And of the roughly 100 best-selling drugs, more than 70% had their protection extended at least once, this according to a study entitled May Your Drug Price be Evergreen published in 2018 in the Oxford Journal of Law and the Biosciences.
MAY YOUR DRUG PRICE BE EVERGREEN
Drug patents in America are good for 20 years. Because that span includes the time it takes for the FDA to approve a given drug for use, a drugmaker generally has 7 to 12 years of exclusivity.
In a call to give the give the US patent office more resources to review and reject spurious patents, the USA Today Editorial Board notes that current patent laws balance two conflicting interests, rewarding drugmakers that develop useful medicines, and getting less expensive generics into the hands of users.
Spurious patents, you say?
“Evergreening” involves making slight changes to existing drugs in order to capitalize on the brand-name’s success. The changes may or may not offer therapeutic benefits to patients — indeed, the change might be simply cosmetic, a change in the color of a pill for instance — but it allows the company to apply for a new patent and new protections.
From May Your Drug Price be Evergreen: “Consider the dementia medication Namenda, a blockbuster drug that was scheduled to lose patent protection in 2015. The company launched a longer-acting version of the original drug product and began encouraging patients and doctors to switch to the patent-protected, longer-acting version in order to undermine generic competition.”
CURRENT PATENT LAWS STIFLE DRUG INNOVATION
This brings us to “thicketing,” and a superb article that we recommend you read in its entirety.
“Thicketing” is the process whereby a drug manufacturer proliferates the patents associated with a given drug. A company might file patents to protect obscure steps in the production and manufacturing process, for instance, or specific adjustments in dosing, or a change to the prescription regimen.
The article, published July 18, 2019 in Fortune, is entitled Protect at All Costs: How the Maker of the World’s Bestselling Drug Keeps Prices Sky-High. Author Cy Mukherjee discusses the many ways that the U.S. patent system not only allows but also incentivizes anti-competitive practices. Indeed, the race to extend patent exclusivity is driving up costs for everybody—patients, government payers, and insurers—while at the same time stifling the R & D that high drug prices are supposed to fund.
The article focuses on Humira, the world’s #1 bestselling drug.
As Mr. Mukherjee puts it, “The story of how Humira became the world’s bestselling drug is a case study of an industry in slow-motion failure—of a corporate model that is increasingly forsaking investing in research and discovery in favor of purchasing it.”
At Scripta, we have seen first hand how this sort of anti-competitive approach to preserving blockbuster profits can cost both employer plans and the patients they insure. Call us today to make sure that your health plan doesn’t fall victim to Big Pharma’s pricing scams.
THE FOREST AND THE TREES
Humira is used to treat a slew of conditions from arthritis to psoriasis to Crohn’s disease and ulcerative colitis. The drug first received FDA approval to market in Dec. 31, 2002. Today, it is the bestselling drug in the world, bringing in nearly $20 billion in global sales last year alone.
That figure represents more than 60% of drugmaker AbbVie’s 2018 revenues, and you would never know it, but their first patent expired in 2016.
According to filings related a new lawsuit, filed by large grocery workers’ union in New York, AbbVie applied for and won 75 Humira patents in the three years before its initial patent expired. AbbVie CEO Richard Gonzalez has said the company now holds approximately 136 Humira patents.
From the Fortune article: “That includes more than 30 patents on the ways in which the drug is administered; more than 25 patents on various formulations of the drug; more than 50 patents related to Humira’s manufacturing processes; and about 20 patents on the delivery devices that customers use to take the medicine.”
The result is a challenging environment (to say the least) for would-be makers of a generic equivalent of Humira.
Nine companies have had to fight and settle patent litigation with AbbVie. The three companies that have had biosimilars approved have struck deals to delay production until 2023! That means fewer choices—and higher costs—for consumers who might otherwise pursue cheaper options:
Again, according to Fortune, “The the U.S. list price of the standard 40 mg Humira injectable pen, used in the treatment of rheumatoid arthritis, more than tripled from 2006 to 2017, with the price for a one-year supply soaring from $16,636 to $58,612. That’s a compound annual growth rate of over 12%.”
FALSE CLAIMS COULD YIELD A BIG SETTLEMENT
Ready for some good news?
A new lawsuit is attempting to recoup profits generated by false patent claims. If it succeeds, it could be a huge win for both patients and taxpayers (though the government has yet to join the suit).
We won’t be holding our breath.
Valerie Bauman, writing in Bloomberg Law, today notes that “A patent attorney is using the False Claims Act to sue brand-name drug companies over extending their patent protections, potentially carving a new legal path for stopping big-brand drugmakers from keeping generics off the market.”
At issue, Janssen pharmaceutical’s attempts to extend the life-cycle of Zytiga, an expensive (and profitable) prostate cancer drug. The follow-on patents, which called for administering the original drug with the steroid prednisone, were rejected several times as too obvious to patent, then granted in 2014, and then overturned in 2018, before being finally invalidated in May of 2019.
As Ms. Bauman notes, “Over that multi-year period, Johson & Johnson and Janssen had a monopoly on Zytiga while the issue worked its way through the courts.” Zytiga, for the record, retails for as much as $10,000 a month, producing nearly $3.5 billion in revenue in 2018, according to Johnson & Johnson’s annual report.
At Scripta, we help you stay ahead of drug prices that can change overnight as a result of pricing games and profiteering by Big Pharma. Call us: we monitor every transaction, for every employee, every day.
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