Pharmaceutical industry faces growing pressure over high price of drugs
A report in the journal Health Affairs suggests price increases in brand-name medications are 'largely driven by existing drugs' not new products; Jonathan Serrie reports.
Senator John Cornyn recently said he fears drug companies may be gaming America's patent system.
According to the Republican senator from Texas, some firms are making insignificant tweaks to drug formulas and then filing new patents on the upgraded medicines. The firms then allegedly use these patents to prevent competing treatments from entering the market.
Cornyn cited recent increases in the price of insulin as proof of this alleged gaming. And he urged his colleagues to consider changing patent laws to prevent such abuse.
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His efforts to reduce patients' pharmacy bills are laudable. But America's patent system isn't driving up the price of drugs. In fact, patents are the reason those medications exist in the first place.
As Cornyn noted, the sticker price of insulin has soared as much as 585 percent in recent years. The rising prices have made it difficult for some of the 2.8 million Texans with diabetes to afford their prescriptions.
One in four patients recently skipped doses, took less than the recommended dose, or otherwise "skimped" on their insulin due to cost concerns, according to the Journal of the American Medical Association.
Patent gaming can't explain such price increases. The insulin market is quite competitive. There are more than a dozen brand-name insulins on the market.
Drug company "greed" isn't to blame, either. The net price of insulin -- the amount that drug companies receive after giving discounts to insurance plans -- has actually flatlined in recent years, even though sticker prices have increased.
In other words, rolling back patent protections wouldn't make drugs more affordable. But it would hurt patients.
Developing a new drug is difficult and expensive. The average medicine costs roughly $2.6 billion to bring to market. The development process often takes a decade or more. And most drugs that begin clinical trials never make it to market.
Patents ensure that scientists and investors are rewarded for undertaking these risky research projects. Patents temporarily prevent competing firms from copying a rival's new drug. This allows the company that invented the new medicine to recoup at least some of its development costs before copycat generics enter the market.
Of course, rival drug companies are still free to invent their own innovative medicines. By preventing companies from simply freeloading off each other's research, patents force drug firms to be more innovative, not less. And that spells more effective therapies, medicines tailored to individual patients and cures for previously incurable diseases.
Weakening the patent system -- even in a good-faith effort to crack down on alleged gaming -- would undermine the economic incentives that make drug development possible. Drug developers would struggle to attract investment for new research if investors feared the government might gut patents on suspicion. The pace of medical innovation would slow down dramatically.
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Patients across the country would suffer. Diabetes patients in particular could lose hope for a cure. Drug companies are currently working on more than 170 experimental diabetes treatments. That research wouldn't be possible without a strong, reliable patent system.
Cornyn's concerns about patients' rising drug bills are justified. But tampering with patent laws isn't the right way to relieve patients.