Drug prices continued: Innovation?

Pharmaceutical manufacturers claim that they need patent protection and marketing exclusivity so they can charge high prices to recoup the costs of drug development and clinical trials. There are a few things wrong with this argument, but they add up to the general fact that the system does not serve the public interest. Drug companies care about one thing only, that is profit. And the pursuit of profit does not serve the interests of public health or social welfare.

One obvious mismatch between the goal of public health and the goal of profit is that a relatively cheap drug that you can take once or for a week or so, that will cure you, is not nearly as profitable as a expensive drug that you have to take for the rest of your life, and an expensive drug you have to take for the rest of your life is even better, from the perspective of pharmacy executives. That is why we don't see any new antibiotics coming out of the industry despite the looming crisis of drug resistance. It's why we do see a lot of very expensive cancer therapies. 

 

Don't get me wrong -- the revolution in scientific understanding of the genetic mechanisms of malignancy has resulted in greatly improved survival and quality of life for many people with cancer. But, first of all, there is a huge range in benefits. Some treatments cost a hundred thousand dollars or more and usually give people only a few extra months of life. We can have a philosophical debate about whether that's worth it, but I'll save it for later. For now, just keep it in mind. Other treatments can be effective at suppressing cancer for years or decades, if you're lucky enough to have a cancer with the right kinds of genetic abnormalities. But in general, they aren't a cure -- you have to keep taking them.

That wouldn't be so terrible if, after the patent expired, generic manufacturers could step in and drive the price down. But the pharmaceutical companies have ways of preventing that. It's called evergreening:

 

“Competition is the backbone of the U.S. economy,” said Professor Robin Feldman, Director of the UC Hastings Center for Innovation, who spearheaded the database’s creation. ​“But it’s not what we’re seeing in the drug industry.

“With evergreening, pharmaceutical companies repeatedly make slight, often trivial, modifications to drugs, dosage levels, delivery systems or other aspects to obtain new protections,” she said. ​“They pile these protections on over and over again — so often that 78 percent of the drugs associated with new patents were not new drugs coming on the market, but existing drugs.”

The linked essay tells the story of Elsa Dixler, who takes Revlimid for multiple myeloma. It worked! “I was able to go back to work, see my daughter receive her Ph.D, and have a pretty normal life,” said Dixler, a Brooklyn resident who is now 74. ​“So, on the one hand, I feel enormously grateful.” But it costs her $12,000 a year in copays, and it costs Medicare $197,500 a year -- by Medicare we mean the taxpayers, obviously. 

Revlimid should have been subject to competition from generic drug makers starting in 2009, bringing down its cost by many orders of magnitude. But by obtaining 27 additional patents, eight orphan drug exclusivities and 91 total additional protections from the U.S. Food and Drug Administration (FDA) since Revlimid’s introduction in 2005, its manufacturer, Celgene, has extended the drug’s monopoly period by 18 years — through March 8, 2028.

Oh, and by the way, Celgene did not discover Revlimid in the first place, they just got patent approval to use it for multiple myeloma. It is better known as Thalidomide. (At age 74, Dixler obviously doesn't need to worry about getting pregnant.) That's just one anecdote among hundreds. I'll have something to say about what to do about it soon.