American Society of Hematology
Pharmaceutical companies use several strategies to keep affordable generic drugs from the market, illustrating an emerging trend that authors say is becoming as harmful to consumers as high-cost brand-name drugs, authors report in a new article.
An article published online today in Blood, the
Journal of the American Society of Hematology (ASH), suggests that
pharmaceutical companies use several strategies to keep affordable generic
drugs from the market, illustrating an emerging trend that authors say is
becoming as harmful to consumers as high-cost brand-name drugs.
The market price of pharmaceuticals, some costing patients more
than $100,000 per year, increases public health spending and sometimes forces
patients to make life-or-death decisions when they cannot afford their
medications.
The authors write that approximately one in five Americans admit they do not fill their prescriptions because of cost. From an economic standpoint, in 2013 the United States spent nearly 40 percent more per capita on pharmaceuticals than the second highest spender, Canada.
The authors write that approximately one in five Americans admit they do not fill their prescriptions because of cost. From an economic standpoint, in 2013 the United States spent nearly 40 percent more per capita on pharmaceuticals than the second highest spender, Canada.
Generic drugs, which by law may enter the market once the patent on a brand-name drug expires, are intended to offer an affordable option for patients without sacrificing the efficacy and safety of the original formula. From 2004-2013, generic drugs saved the U.S. health system nearly $1.5 trillion, according to the authors. However, for many patients generic drugs are inaccessible.
"The timely availability of affordable generic drugs is the
difference between life or death for patients with cancer and other diseases who
cannot afford brand-name pharmaceuticals, the majority of which are priced at
monopoly levels and protected by 20-year patents," said lead author Hagop
Kantarjian, MD, of The University of Texas MD Anderson Cancer Center.
"Unfortunately, these sorely needed generics are increasingly out of reach. As we sought to understand what keeps these affordable drugs from the market, we identified several specific strategies that pharmaceutical companies use to extend their patents and eliminate competition."
"Unfortunately, these sorely needed generics are increasingly out of reach. As we sought to understand what keeps these affordable drugs from the market, we identified several specific strategies that pharmaceutical companies use to extend their patents and eliminate competition."
In this Blood Forum article, a feature of the journal designed
to present well-documented opinions on issues important to the science and
practice of hematology, Dr. Kantarjian and colleagues assert that
pharmaceutical companies use a variety of strategies to delay, prevent, and
suppress the timely availability of affordable generic drugs.
Among them, the authors detail "pay-for-delay," in which the company that owns the patent pays a generic company to delay entry into the market. The Federal Trade Commission estimates that the pay-for-delay settlements cost taxpayers, insurance companies, and consumers approximately $3.5 billion per year.
In other cases detailed in the article, the patent-holder deters competition by creating its own version of drugs at generic prices. While this practice may reduce costs for consumers by 4-8 percent in the short-term, the authors suggest that companies often use the authorized generics as a bargaining chip in "pay-for-delay" deals, pledging not to release their own drugs in return for the true generic company promising to delay market entry.
Among them, the authors detail "pay-for-delay," in which the company that owns the patent pays a generic company to delay entry into the market. The Federal Trade Commission estimates that the pay-for-delay settlements cost taxpayers, insurance companies, and consumers approximately $3.5 billion per year.
In other cases detailed in the article, the patent-holder deters competition by creating its own version of drugs at generic prices. While this practice may reduce costs for consumers by 4-8 percent in the short-term, the authors suggest that companies often use the authorized generics as a bargaining chip in "pay-for-delay" deals, pledging not to release their own drugs in return for the true generic company promising to delay market entry.
Other strategies the authors discuss include investing heavily
in advertising the brand-name drug (often spending more on marketing than on
research and development) and lobbying for laws that prevent patients from
importing cheaper generics from other countries, which the authors write can
cost as little as 20-50 percent of U.S. prices. The authors also highlight some
drug companies that they allege buy out competitors and then increase the price
of a newly acquired generic drug by several fold overnight.
In addition, the authors also describe a strategy they call
"product hopping," which involves switching the market for a drug to
a reformulated "new and improved" version with a slightly different
tablet or capsule dose that offers no therapeutic advantage over the original
but has a later-expiring patent.
The company then heavily advertises the new brand-name drug in an effort to convince patients and physicians to switch. As a result, when the generic version of the original becomes available, pharmacists cannot substitute it for the new branded version because state laws allow substitution only if certain characteristics, such as dosing, remain the same.
The company then heavily advertises the new brand-name drug in an effort to convince patients and physicians to switch. As a result, when the generic version of the original becomes available, pharmacists cannot substitute it for the new branded version because state laws allow substitution only if certain characteristics, such as dosing, remain the same.
In recognition of the harm and expense that the authors suggest
these strategies impart on both patients and the economy, they propose several
solutions that would support timely access to affordable generic drugs,
including allowing Medicare to negotiate drug prices, monitoring and penalizing
pay-for-delay deals, allowing transportation of pharmaceuticals across borders
for individual use, and challenging weak patents.
"Each day in my clinic I see leukemia patients who are
harmed because they cannot afford their treatment, some risking death because
they cannot pay for the medicine keeping them alive," said Dr. Kantarjian.
"Overall, these strategies demonstrate that the trend of high brand-name drug prices has recently infected generic drugs, as companies value profit at the expense of long-term utility to society. We must be vigilant in recognizing these strategies and advocating for solutions that will allow companies to accomplish their dual mission: make reasonable profits and help save and/or improve patients' lives."
"Overall, these strategies demonstrate that the trend of high brand-name drug prices has recently infected generic drugs, as companies value profit at the expense of long-term utility to society. We must be vigilant in recognizing these strategies and advocating for solutions that will allow companies to accomplish their dual mission: make reasonable profits and help save and/or improve patients' lives."
