Pharmaceutical Patent Policy

Pharmaceutical Research and Development Departments are being continuously downsized and having their funding cut as they struggle to break even with producing new drugs that are able to pass the stringent multi-phase requirements employed by the FDA before approval. The high-risk type of business often results in failure and stems profit from high-impact results.

Numerous drugs are developed at a time and few are successful enough for pharmaceutical companies to cough up the money required to run FDA trials necessary to prove the drug is safe for patients. Data from DiMasi and Grabowski indicate that the R&D cost for developing an individual drug amounts to roughly $1.2 billion and around 10-15 years for the drug to develop.

In the past 50 years, only 261 organizations have managed to register at least one molecular entity, despite more than 4,300 companies currently involved in the process of drug innovation. Even after the drug is approved, the company that invested in the research & the trial testing has a limited time to exclusively market the drug before generic substitutes can replace it on the market and cut in on its profit.

After patent life expires, generic drug market companies have access to all the research files submitted to the FDA in order for them to engineer their own version of the drug. Generic drug market companies also do not have to run extensive patient trials, as the original drug has already completed such examinations. It takes on average around 1-2 months for the generic pills to hit the market after the patent expires. The main requirement for generic drug companies is to show "bioequivalence": showing that the generic drug has the same effects on patient as the old drug. This allows generic drug companies to cut research costs and allow them to market pills at a cheaper cost than their pricier counterparts.

Should the FDA should extend pharmaceutical patent life and take further action in securing the intellectual property of innovative research? Are there other questions that should be considered?

References
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1. Patents: Source
2. Industry: Source

My client, Biased Argument, is an excellent lawyer. He will fight for any rights he deems necessary for the people, and he furthers government research in NASA and Aerospace research so that additional tests can be conducted in space that simply cannot be done on Earth. He has cut deep into his own pockets due to his extensive belief in the advancement of these sciences. Each trial costs upwards of several hundred million dollars that might prove a negative or, even worse, a false positive which further hampers his own research.

His opponent, Generic Institute, is a private corporation firm that capitalizes on Biased Argument's research and performs none of the research and development while gaining all of the rewards. They also perform some of their own in house testing to make sure their research is just as effective as Biased Argument's without all the aerospace investment. Meanwhile, Biased Argument is really the person that loves you a whole bunch while this evil Generic Institute cares nothing for you.

Should Generic Institute be allowed to perform such mockery? Why do idiot places like this exist?

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Those who market their own drugs get 10 - 15 years of exclusivity for their creation plus whatever lobbying the company can do to increase this benefit for certain drugs. Not to mention that previous presidents (namely Clinton, I believe) provide drug companies with extended exclusivity if they create a specific drug during a time of need such as the Anthrax scare several years back, H1N1, or whooping cough. Also, in many parts of the world the drug gets copied anyway behind the FDA's back and is imported from other countries to skirt approval and bioequivalency claims.

Like all science research, pharmaceutical companies are a high risk entity because so many of them fail. But that's a part of any business. If you look at the survival rate of a business, a significant margin of startups fail within two years. That seems pretty in line with the statistics you've supplied. I don't think pharmaceutical companies are hurting at all - only average with the rest of the business world.

Those who market their own drugs get 10 - 15 years of exclusivity for their creation plus whatever lobbying the company can do to increase this benefit for certain drugs.

I started writing this last night, but I passed out due to exhaustion and finished a couple more sentences right now. I’ll address the rest of your post when I have time.

The company must accumulate enough income during that 10-15 year period in order to compensate for the deficits created by the parallel R&D projects that were run in lieu with the pill (scrapped investment before seeking FDA approval), the cost of running FDA and supplemental clinical trials (FDA approval step), and dealing with generic competition (which according to calculations using Monte Carlo) that result in an 80% sales loss for the parent company upon patent expiration. In order to bring in prospective profit, pharmaceutical companies will try a variety of different strategies in order to sell their product. Pharmaceutical companies are known to put expensive prices on medication in order to cash in on short-term profits. For long-term benefits, pharmaceutical companies often persuade physicians and hospitals to endorse their product for current and prospective patients. The drastic lengths that pharmaceutical companies go through in order to market their products is affected by the fact that they are on a time scale to sell their own innovation. This process is not efficient or ideal for pharmaceutical companies as many products such as Vioxx have been rushed and clinical tests were not accounted for in revising the pill due to the company’s necessity to produce financial influx off the production of the pill. Forcing pharmaceutical companies to play the part of researcher, tester, and marketer is bound to cause ethical problems as the three components come together synergistically and result in amplified issues that are more efficiently considered on an individual level. Legislation should be mandated to mitigate a successful solution towards maximizing the efficiency of such companies, rather than relying on the legislation stipulated by Hatch-Waxman act that is obsolete in fulfilling this requirement as its basis exists in situations that faced 1984.

As a brief side note, I do not condemn generic drug companies. I have stock in Teva Pharmaceuticals and agree with the principle that they provide affordable pills for many individuals. I am primarily concerned that pharmaceutical companies have been constantly downsizing R&D departments (Pfizer firing researchers in order to prepare for the termination of Astorvastatin patent) which could possibly result in many drugs failing to be produced or innovated. If there is no innovation, then there can be no generics.

How would you feel about some post-patent system that guarantees some percent of production costs (as independently determined by an auditor if necessary) go to the originator? Like say it costs 12 cents a pill to manufacture Vibralux, then a 20% fee to the original company would mean tacking another 2.4 cents onto that to send to the innovators. It wouldn't be as high as when the original company is selling them for 50 cents a pill, but it would prevent them from ever losing out completely.


The reason for basing it on production cost rather than a license negotiation (or patent) is so that if a company innovates on their own, reducing production costs, they can reap benefits fully, whereas if the fee were independent of the manufacturing cost, there's that much less incentive to improve mfr.

After the patent expires, the marketing research firm can then use its already existent production capacity to create an authorized generic and sell that at quantity and at lower cost than a generic company can due to no further investment needed on production capital. Is there something wrong with this? It's not like the company completely loses control of their own drug before/during/after the 180 day exclusivity period, and the much lower prices due to competition from already available production facilities versus other generic companies having to provide evidence of bioequivalency sounds like a win for the pharmaceutical company, FDA, and consumers alike.

Hope I didn't miss anything there.

The problem with Vioxx was partly the pharmaceutical companies, but also a fault on the part of not enough people tested. It was only with independent research firms years later that confirmed the increase in risk of cardiovascular complications on a scale that an FDA approved trial could not and cannot reach in limited production scenarios with unverified drugs. Unfortunately, problems like these exist only because the cost of actually doing mass testing far outweighs the benefits.

Ooh that's true. I didn't consider that. Let me see what I can pull up and assess how I feel about it.