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Shockingly, Drug Manufacturers Will Do Anything to Block Competition

By May 25, 2018Commentary

This is really no surprise, in any industry, but brand-name drug makers will go to extraordinary lengths to prevent competition, even after patents have expired, to the detriment of patients and payers, as detailed in a Kaiser Family Foundation analysis.  (KFF Analysis)    The authors identified a number of situations in which manufacturers have relied on a variety of tactics to keep generic substitutes for their products off the market, while at the same time raising the prices of the drugs they are protecting by double digit percents every year.  The analysis concludes that this cost Medicaid and Medicare alone as much as $12 billion in 2016.  One such tactic is refusing to give samples of the brand drug to potential generic makers, who need the samples to do bio equivalence testing.  The FDA identified at least 50 drugs where this occurred.  Seems like an easy fix for either the FDA or Congress.  Celgene is a prime culprit, getting 63% of its revenue from Revlimed, a cancer drug on which patents have expired.  Celgene has prevented generic testing, but is raising the drug’s price steadily, over 40% in four years, to an average cost per patient of over $75,000.  Other prominent sinners include Novartis with Exjade; Action with Tracleer and Ranbaxy with Absorica.

To me the solution is obvious, patents are government-granted monopolies and the government has every right to impose whatever conditions it wants on their grant.  In the case of drugs, that power should be used to tie patent length to both initial pricing and any price increases.  All you have to do is look at manufacturer margins to know that there is plenty of room for both more reasonable prices and drug companies having ample funds for further innovation.

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