By Janet Fang
Posting in Healthcare
Now that patents are expiring on blockbuster drugs, their prices are rising faster than ever as drugmakers scramble to make as much money as possible before generics drive prices down.
Now that patents are expiring on blockbuster drugs, their prices are rising faster than ever, Reuters reports.
Drug manufacturers have an exclusive right to sell new products for up to 20 years from the date of their US patent filing. Once the patent expires, a number of generic copycats typically enter the market, driving down prices.
(This is what people are calling “the looming patent cliff.”)
Because of the increased number of drugs going generic, big companies profit more by increasing prices of their brand name drugs on the market.
$25.4 billion in US drug sales are at risk of generic competition this year, and another $26.1 billion in sales will lose patent protection next year.
According to Thomson Reuters MarketScan:
- For the 15 bestselling drugs, prices rose faster in 2010 than in each of the last 5 years. Two-thirds of the drugs saw double-digit price hikes.
- Payments for Pfizer’s cholesterol-reducing Lipitor rose 11.4% last year, compared with 5% annually from 2005 to 2010. The cost of a daily dose rose from $3.17 at the end of 2009 to $3.53 at the end of 2010. (Lipitor had 2010 global sales of $10.7 billion.)
- AstraZeneca's antipsychotic drug Seroquel topped the list with a 16.5% price jump.
- Drugs with price rises in the mid teens included: AstraZeneca’s cholesterol drug Crestor, Bristol Myers Squibb and Sanofi-Aventis’s blood-clot preventer Plavix, and Merck’s asthma treatment Singulair.
Insurers often get a discount – but the fact that they’re paying more for drugs is likely to push up the premiums they charge at a time when healthcare costs are already rising much faster than inflation.
According to IMS Health, the US healthcare system will reap at least $70 billion in savings over the next 4 years with lower-cost generic replacements. But until there's a generic competitor, there’s very little pushback on brand name prices.
While scrambling to make as much money as possible before their patents expire, drugmakers are also taking advantage of how last year's healthcare reform bill didn't cap drug prices.
Because the Affordable Care Act set no limits on drug prices, some experts say Medicare and what some have termed "Obamacare" are reasons for the higher rates of branded price inflation. Still, others blame the way drugmakers are paid and how consumers are reimbursed for pushing prices up.
In any case, drugmakers argue they need the revenue to pay for developing new medicines. Winning regulatory approval for a drug takes, on average, 15 years and $1 billion.
So they, of course, try to keep patent protection as long as possible. Earlier this month, the Supreme Court upheld a ruling that pharma companies can pay rivals to delay production of generic copies.
Related on SmartPlanet:
- The drug development discord: does it cost less than we think?
- What happens when big pharma buys a lithe biotech?
- FDA approvals decline, focus shifts to specialty-care drugs
- Pfizer slashes R&D by billions, ditching less profitable diseases
- Is the field of obesity drugs dead?
Image: pills by sʇɹnʞ via Flickr
Mar 25, 2011
Working in a hospital setting, especially in Critical Care, it is disheartening when there are life-saving drugs that are suddenly "in shortage." I was recently educated by a pahrmacist that the drug companies cannot make much profit on drugs that have been around a while (patents expired), so they often turn their production to making the drugs that they can still have the patent rights for and make more money. Patients are suffering and as healthcare providers we are left attempting to treat patients with suboptimal drug therapies until the optimal drug returns to market.
Greed Plain and simple.Sure it costs to make drugs but come on with all the help uncle Sam or we the tax payers pitch in.Its Greed.
@smartbil: Point taken. I might have seen that term one too many times and it slipped. Certainly no such slant is implied.
Well, if they made the patent lfe the same as copyrights they get to spread the cost out over 70 to 105 years - could even be 170 years or more if the patent is filed in the name of a person! I agree, the patent timer of expiration, if subject to ANY government regulation before it can be used, should ONLY start once it is approved - but the patent itself would be enforced from the day it was filed till the ultimate expiration.
Interesting article, but "Obamacare" is a political term, often used by Republicans and those who oppose it. Slanted article?
Hates Idiots is correct about the approval process taking the majority of the life of a patent as well as the huge costs involved with clinical testing and production costs. The high cost of drugs is partially due to the loss of patent life and the expenses of developing and testing a new drug. It might help if the patent life of a drug starts with the regulatory approval. This way the costs could be spread over the full 20 years and not 5 to 10 years.
- - Winning regulatory approval for a drug takes, on average, 15 years and $1 billion. - - What they do not tell you is that ever since the money flow was opened on the development of AIDs drugs, big pharma gets reimbursed hundreds of millions by Uncle Sam for many successful drugs. And they are allowed to count those reimbursed costs when calculating the cost of selling a drug. Translation. They often get reimbursed twice for a successful drug. Once by their rich uncle and again by the suffering people who need the drug and already paid for developing it with their tax dollars.