Posts Tagged: "drug prices"

Once we go down a path of government price controls and compulsory licensing we will have foregone opportunities for other, more rational policy choices and will soon find ourselves in a race to the bottom. Of course, making prescription drugs more affordable must be an important, shared goal. But the solutions we pursue cannot risk choking off America’s innovative ecosystem that leads the world in discovering new cures and treatments. As Nobel laureate and NIH Director Harold Varmus said in 1995, one must first have a new drug to price before one can worry about how to price it.  Letting our federal government import foreign price controls and expropriate patents is not the way to go about it.

The Hatch-Waxman Act and the Biologic Price Competition and Innovation Act are both forged from a noble ideal, grounded in a commitment to a robust and earnest patent system that rewards real innovation… By the power vested in them by specially-reserved patent laws, drug patents are a patent species of their own universe. They can have the economic power of nuclear warheads, in an industry built on an exclusivity model worth hundreds of billions of dollars, per year. We simply cannot afford to fill the silos of those warheads with patent waste that does not innovate or improve upon anything, but which can wreak economic and social havoc, while feeding the general public’s perception that all patents stink.

Ever since the Supreme Court decided KSR v. Teleflex, it has been appropriate to reject a patent claim because it was obvious to try. If twice the dose intravenously, half as often works, why wouldn’t the highly-educated person of skill in the art – who would hold an M.D. or Ph.D. level education with years of experience – not be tempted to try the same thing subcutaneously? And if they do try it and the results are as expected that should mean, under KSR, that the claimed invention is obvious. Somehow in the pharmaceutical arts KSR does not get applied that way.

If a drug company plants a more than 100-patent thicket to protect market exclusivity, then it had better be able to justify why it should deserve the cumulative protection of patent term. Yes, the patent on the original formulation will fall into the public domain and may be capable of being made by generics long before the last of the patents expire, but often-times those follow on “innovations” are the kind of trivial advances that ordinarily shouldn’t support a fresh patent.

Despite the difficulties, the private sector is far and away the best bet for developing the desperately needed medicines of the future. Government is a critical partner and can fund research at our universities and federal laboratories that can’t be done anywhere else. It can also remove some, but not all of the risk inherent in developing treatments for diseases lacking sufficient market size and stability to attract traditional investment. But it still requires a company willing to assume the burden of transforming a discovery into a product that can alleviate suffering.

The WHO is gathering governments, academics and activists in Amsterdam next month to discuss price setting options for medicines. But the so-called Fair Pricing Forum ignores the main driver of higher healthcare spending and will do more harm than good. While there is a pressing need to balance access to affordable medicines and the incentives to innovate, a reactionary focus on prices is misdirected and could have dire consequences for pharmaceutical innovation… The WHO’s exclusive focus on price setting also misses the mark on another issue – medicines are working to extend lives and even to lower overall healthcare spending by eliminating the need for more expensive interventions, such as surgery and hospitalization.

The savings impact of directly negotiated drug costs is considered negligible, but intrusion into biomedical pricing will destabilize life science commercialization… Any way you slice it, added commercialization uncertainty resulting from even negligible savings will be seen by the private sector as a foot-in-the-door for more government price controlling… Participants in early stage life science development including research universities and medical centers must watch this issue closely and be ready to join MMA’ s more conspicuous defenders if and when MMA’s ban on Medicare direct negotiations suddenly appears.

We create two new companies around academic inventions every day of the year. The critical role such companies play in drug development is clear. The successful integration of public research institutions into the economy is based on the Bayh-Dole Act, which inserted the incentives of patent ownership into the government R&D system. Not a single new drug had been developed from NIH funded research under the patent destroying policies preceding Bayh-Dole. No one is going to spend billions of dollars and more than a decade of effort turning early stage inventions into new drugs or fund a life science startup company without strong patent protection. Yet the patent system and Bayh-Dole are precisely what the critics seek to undermine.

EpiPen’s eruptive timing was important. Had Congress been in town, lawmakers would have filled the front pages with populist blather. Had Mylan been less forthcoming about the retail drug supply chain, the press would have been less likely to look into its composition. Had Mylan’s CEO not been a sitting Senator’s daughter, gossipy Hill reporters would have been bored. If health insurer withdrawals from ACA exchanges had not led to higher consumer costs and rates to match, and most important, if anaphylaxis did not simultaneously threaten the lives so many children and bust the back-to-school budgets of more than 15 million middle American families, the multi component drug pricing issues might have been buried on news papers’ back pages. EpiPen pulled these issues out of hiding into the light of public concern where oversimplified self-serving solutions tend to wilt. The fact is we have been treated to a highly publicized health pricing tutorial using a live case study to learn about the many drivers of retail drug pricing.

The problem is that the government is standing in the way of these competitive autoinjectors getting into the hands of the patients who need them. For example, Teva Pharmaceutical Industries has a competitive autoinjector. However, in March, the U.S. Food and Drug Administration (FDA) rejected Teva’s application to bring its competitive autoinjector to patients… While Mylan, like most large pharmaceutical manufacturers, has spent millions of dollars on lobbyists and political campaign contributions, there is no evidence of any illegal quid pro quo. Mylan is simply acting in the interests of its shareholders. It is the system itself, not Mylan, that is corrupt.

Given the devastating impact of counterfeit medicines on patients and the importance of intellectual property protection in combating pharmaceutical counterfeiting, it is troubling that the UN High Level Panel seems poised to prevent a series of recommendations that will undermine public health under the guise of enhancing access. Without the assurance of quality medicines, access is meaningless. Moreover, while falsely presenting intellectual property rights as the primary obstacle to global health care, the High Level Panel downplays a host of other factors that prevent developing country patients from getting the drugs they need: inadequate medical infrastructure, insufficient political will, a shortage of clinical trials in nations where neglected diseases are endemic, poverty, and insufficient market incentives.

Consumers suffer the scourge of high drug prices. Brand-name drug companies reap monopoly profits. But generic drugs, which promise lower prices, are often nowhere to be found. One reason is that brand firms have engaged in an array of conduct to block generics. In short: A sample is crucial. Without it, there is no generic.

The new year was hardly underway before Representative Lloyd Doggett (D-TX) and 50 of his House colleagues sent a letter to Health and Human Services Secretary Sylvia Burwell and NIH Director Francis Collins urging them to “march in” under the Bayh-Dole Act to control prices for drugs developed under the law. While the high cost of drugs is a legitimate concern, attempts to address the problem through technology transfer statutes would only guarantee that we will have fewer new drugs, not that they will be cheaper. The march-in provision is intended for instances when a licensee is not making good faith efforts to bring an invention to market or when national emergencies require that more product is needed than a licensee is capable of making, not to fix drug prices.

Pharmaceuticals is the industry sector where a strong patent system, promising substantial returns to successful innovation, is of paramount importance. Regrettably, the weakening of pharmaceutical patent rights through legislative means and antitrust lawsuits is symptomatic of a broader and more general policy attack that antitrust enforcers have directed against patents in recent years. Antitrust enforcers and legislators clearly need a few remedial lessons in the economics of innovation before their myopic meddling cripples the (up-to-now) highly successful American pharmaceutical sector and other key U.S. industries, which have stood as a testament to the value of strong patent rights.