The Best Fix for American Drug Prices Is Already on the Books
&gt; Over time, Big Pharma learned how to game the law. As the patent for the original drug approached expiration, companies added wrinkles — a new coating for the pill, a time-release version, and so on — that they then patented. If the patents were approved, and they usually were, the exclusivity clock would start ticking all over again.<p>This is so misleading. When this happens, only the new &quot;wrinkles&quot; are patented. The drug itself becomes free for everyone to use.<p>&gt; Hatch-Waxman worked exactly the way it was supposed to for a long time. For many high-priced drugs, once the generics flooded the market, the price went down by as much as 90 percent. Statins are a good example: The price of generic Lipitor is about $19 for 90 tablets, while the price of branded Lipitor is $165 for 30 tablets. The market share for the branded drug often dropped by 75 percent or more. Over time, Big Pharma learned how to game the law. ... The rheumatoid arthritis drug Humira is a perfect example of what has happened.<p>Humira is not an example of &quot;gaming&quot; Hatch-Waxman. Hatch-Waxman assumes that the secret sauce is a drug&#x27;s chemical formula. It creates a process for generics to be created when the patent on that formula expires. Humira is what&#x27;s called a biologic, where the secret sauce is not only the active ingredient, but the process of manipulating bacterial cells into manufacturing the drug: <a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;view&#x2F;articles&#x2F;2017-09-07&#x2F;why-the-biosimilar-drug-revolution-hasn-t-arrived" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;view&#x2F;articles&#x2F;2017-09-07&#x2F;why-the-b...</a>. AbbVie has another five years left on those patents.<p>The Hatch Waxman equivalent for biologics (&quot;BPCIA&quot;) was only enacted in 2010: <a href="https:&#x2F;&#x2F;www.fda.gov&#x2F;drugs&#x2F;developmentapprovalprocess&#x2F;howdrugsaredevelopedandapproved&#x2F;approvalapplications&#x2F;therapeuticbiologicapplications&#x2F;biosimilars&#x2F;default.htm" rel="nofollow">https:&#x2F;&#x2F;www.fda.gov&#x2F;drugs&#x2F;developmentapprovalprocess&#x2F;howdrug...</a>. Because the law is so new, it will take time before the generics industry figures out how to navigate the new process.<p>The article&#x27;s list of policy recommendations is also ignorant:<p>&gt; First, shorten the patent exclusivity period to 10 years. (Drug companies say they need the longer time to recoup their research and development costs, but the truth is most companies spend more on marketing than R&amp;D.)<p>Drug companies have similar SG&amp;A (overhead) to R&amp;D ratios as tech companies: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=16585194" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=16585194</a>. The point, though oft-repeated, is completely nonsensical. Nobody <i>wants</i> to spend money on marketing. If drug companies could recoup their investment faster by spending less on marketing, they would.<p>&gt; Second, outlaw the practice of paying companies to keep generics off the market and similar forms of gamesmanship.<p>It&#x27;s already a violation of antitrust law: <a href="https:&#x2F;&#x2F;www.ftc.gov&#x2F;news-events&#x2F;media-resources&#x2F;mergers-competition&#x2F;pay-delay" rel="nofollow">https:&#x2F;&#x2F;www.ftc.gov&#x2F;news-events&#x2F;media-resources&#x2F;mergers-comp...</a>.<p>&gt; Third — and most important of all — don’t allow companies to extend the period of exclusivity beyond the original 10 years.<p>That incorrectly assumes that patenting improvements to a drug extends the period of exclusivity of the original drug.