7 ms·

Drugmakers Play The Patent Game To Lock In Prices, Block Competitors

70 points by ilamont 8y ago

slx26 8y ago
plain text version: https://text.npr.org/s.php?sId=652546095 https://text.npr.org/s.php?sId=652546095
wallace_f 8y ago
Also is not the only game they play which puts profits over lives. They spend massively on lobbying to keep the War on Drugs going, blocking drugs--like marijuana--from competing with theirs. https://www.theguardian.com/us-news/2017/apr/03/big-pharma-marijuana-competition-insys-arizona https://www.theguardian.com/us-news/2017/apr/03/big-pharma-m...
wangyjx 8y ago
A stupid accusation. The current situation is by 2017, a successful new drug costs 1.5B $ and 14 years in average, at the same time, more than 95% drug researches fail at different stages. In addition, the patent period counts far before the clinical trials ( begin from the molecular compound finding), usually the patent will only protect its drug less than 10 years. The drugmakers have to earn enough money in less than 10 years to cover all the cost spending on its own research and other failed researchs. Yes, they can make enough profit. Without that, what else can support them to continue research new drugs? by you?
- kiba 8y ago
  Seems like we're running into incrementally diminishing return with the current approach in drug research.
- snarfy 8y ago
  I'm not sure where that $1.5B figure came from but the caveat I've always heard that came along with it is that drug companies pay less than 10% of the actual research costs. The rest is made up from government grants and university research. They mention the total costs to make themselves sound like victims.
  - aaavl2821 8y ago
    That is simply not true. The $1.5B is cost spent to get a single drug approved and includes cost of failure, i.e. Spend on drugs that end up not getting approved. The data that supports this comes from a sampling of pharma company r&d spend The NIH funds about $30B in research each year, NSF about $7B. The top 15 pharma companies spend ~$70B on r&d a year. VCs invest $10-15B / year as of the last few years. Globally all pharma companies spend over $200B on r&d
- arountheworld 8y ago
  Is it known why that costs so much and that the cost isn't artificially inflated to justify the patents or other reasons?
  - deleted 8y ago
    [deleted]
  - User23 8y ago
    Clinical trials up to FDA standards are expensive.
  - aaavl2821 8y ago
    This is the seminal and oft-cited source of those estimates for cost of drug development. The data comes from internal financial records at pharma companies. This is a 2010 paper and costs have since increased: https://www.nature.com/articles/nrd3078 https://www.nature.com/articles/nrd3078 Bottom line is that it is expensive to develop drugs because most of them fail. You need to spend millions of dollars on dozens of drugs that don't work in order to get one drug approved. The single biggest cost driver is cost of Phase 2 failure. Basically when a drug that works in animals doesn't work in people. It costs $40-50M+ and takes 5-7 years to get through phase 2 and over 60% of phase 2 studies fail This is because biology is hard. So the fundamental reason drugs are expensive is because biology is hard You can also look at high level financial metrics compared to new drug approvals to get an orthogonal way of assessing r&d productivity. The top 15 pharma companies spend a combined $70B on r&d per year. In 2017 only 49 new drugs were approved and only like 40% of those were developed by big pharma (the rest were developed by startups that were acquired by big pharma, or developed by mid size pharma). Even if all 49 of those drugs go on to make $1B a year, that will still not return a profit to even just the top 15 pharma companies Also most of those drugs are developed for cancer or rare disease bc the economics of developing drugs for those conditions actually work. For things like cardiovascular disease, stroke, or psychiatric disease, where the economics don't work out, you see very few new drugs despite massive need for better treatments. This has nothing to do with patents and everything to do with the cost of r&d. If pharma companies could develop a new heart drug for cheap and get some lame patent protection to give them a monopoly they would do it
- vuln 8y ago
  They'll spend more than $1.5B on advertising for that wonder drug.
  - shadowtree 8y ago
    you 4-6 years to recoup a couple billion in cost and have to make a profit. how do you do that without any marketing and sales?
  - Fuckyourself 8y ago
    R&D isn't advertising. This is public information because many biotech companies are publicly listed. https://en.wikipedia.org/wiki/Cost_of_drug_development https://en.wikipedia.org/wiki/Cost_of_drug_development https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Find... All you have to do is google "average drug development cost" how hard is that?
- marcosdumay 8y ago
  I would love to see a break-down of those 1.5B. How can one company even organize the spending of that kind of money?
  - aaavl2821 8y ago
    You can go to the SEC EDGAR website and search for 10-K filings for large pharma companies -- Roche, Novartis, Pfizer, Merck etc. they summarize their financials including r&d spend. Most big pharma companies spend $5-12B / year on r&d and it can take 10 years to get approval
- jkbyc 8y ago
  The related trend is called the Eroom's law: https://en.wikipedia.org/wiki/Eroom%27s_law https://en.wikipedia.org/wiki/Eroom%27s_law https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large (graph, "Overall trend in R&D efficiency" from https://www.nature.com/articles/nrd3681 https://www.nature.com/articles/nrd3681 ) or https://www.google.com/search?q=eroom%27s+law&source=lnms&tbm=isch https://www.google.com/search?q=eroom%27s+law&source=lnms&tb...
anon49124 8y ago
Yes, the "free-for-all" sucks. Shkreli-style and worse profiteering on illness, misery and bankrupting people. And this reminds me: there are long off-patent generics costing $10 USD/pill ($300/mo). Isn't this crazy, even considering regulatory and medium-overhead operations? Doesn't this seem like a reasonable social-enterprise opportunity for non-hospital-/non-insurance-owned, employee- & customer-owned co-op generic pharmaceuticals for the US market at a minimum? Fixed margins on products based on production costs and overhead... but with enough investment so it can't get "DRAM price war"ed butt-kicked.
- onetimemanytime 8y ago
  >>"And this reminds me: there are long off-patent generics costing $10 USD/pill ($300/mo). Isn't this crazy, even considering regulatory and medium-overhead operations?" The worst part, you can get the same drug for pennies outside USA. The drug that probably US companies or research invented.
  - thrower123 8y ago
    Or in some cases, the same prescription for your cat or dog at a fraction of the price, in the states. For the same pills.
  - basicmedicines 8y ago
    > The worst part, you can get the same drug for pennies outside USA. The drug that probably US companies or research invented. I have direct personal experience with this, as an American living in the Netherlands. My youngest kid recently had worms appear in her poo. I called up the doctor's office and got a straightforward direction over the phone: go to any pharmacy, ask for mebendazole, give her one pill directly and one more after 2 weeks. No prescription necessary, no doctor's visit necessary unless worms persisted after the second dose. I went to the pharmacy. The medication - 2 doses - was 90 cents. Problem solved. Out of curiosity, I looked up the medication online. It's generic now, having been first marketed in the early 70's. It's considered one of the two standard de-wormers for humans and is on the WHO list of essential medicines. In America, it costs somewhere between $200 and $400 per dose (i.e. double that for a course of treatment.) Why? Because one generic maker (Impax) has cornered the US market. And it would have required a doctor's visit and prescription to acquire. US health care is so fucked.
aaavl2821 8y ago
This article is sort of light on substance and talks a lot about the evils of useless patents without really looking at the broader financial picture, or looking at the real bad actors The real bad actors are companies like Martin shkrelis, or some generics companies that take advantage of regulatory loopholes to sustain monopolies long after the patent expiry. Epipen is the most well know example; acthar gel is another. However for these drugs patents aren't really as much the issue, it's more a regulatory gray area bc FDA has not provided a clear path to developing genetic versions of "complex" drugs The "lifecycle management" patent games mentioned in the article largely no longer work. In general an insurance company won't pay a lot more for a caramel tasting biofilm vs a lime flavored one, or for other trivial innovations that don't improve clinical outcomes. Drug companies file the patents and try to squeeze out gains, but it isn't really that viable of a strategy anymore The only time this actually results in a company being able to charge high prices after the primary patents expire is when there is a new patentable innovation that actually makes patients healthier. A good example is Raptor Pharmaceutical and their drug Procysbi. The drug treats cystinosis, a rare genetic disease that affects young children, impairing growth, and can cause rickets, blindness and acidosis and lead to complete kidney failure by age 10 A generic drug, cysteamine, was used to treat the disease. However it was not a great drug for patients, I think it required 4x day dosing so kids had to wake up like twice in the night to take their meds, resulting in a lot of missed meds, and it also smelled bad (again these are kids taking the drug, if it smells bad they will fight taking it). Procysbi was an improved formulation of cysteamine that was easier for patients to take -- they didn't have to wake up in the night to take it. They did a clinical study showing it was just as effective as cysteamine with less nausea and vomiting but they did not design the study for superiority (ie they did not measure whether improved adherence led to better outcomes), although all but 1 patients chose to stay on Procysbi after the study The company that developed Procysbi charged like $200k / year for it. It was a much better drug for really sick patients, and the company did actual research, but the generic was $8k a year. By the way, the disease affects 500 people in the US / year, and the company treated a significant portion of that population for free during its clinical studies The drug made 500 sick kids healthier, and would never have existed if the company could not charge a high price (again, total market size of 500 patients) I think it's clear that I support this type of work but I understand that some people might rightly view this as unfair. However I think this example is a much better example of the "lifecycle management strategies" that actually work today than the ones referred to in the article For more about Procysbi see here: https://camargopharma.com/2013/05/raptors-procysbi-costs-more-than-a-generic/ https://camargopharma.com/2013/05/raptors-procysbi-costs-mor...
deleted 8y ago
[deleted]

70 points by ilamont 8y ago

plain text version: https://text.npr.org/s.php?sId=652546095 https://text.npr.org/s.php?sId=652546095

Also is not the only game they play which puts profits over lives. They spend massively on lobbying to keep the War on Drugs going, blocking drugs--like marijuana--from competing with theirs. https://www.theguardian.com/us-news/2017/apr/03/big-pharma-marijuana-competition-insys-arizona https://www.theguardian.com/us-news/2017/apr/03/big-pharma-m...

wangyjx 8y ago

A stupid accusation. The current situation is by 2017, a successful new drug costs 1.5B $ and 14 years in average, at the same time, more than 95% drug researches fail at different stages. In addition, the patent period counts far before the clinical trials ( begin from the molecular compound finding), usually the patent will only protect its drug less than 10 years. The drugmakers have to earn enough money in less than 10 years to cover all the cost spending on its own research and other failed researchs. Yes, they can make enough profit. Without that, what else can support them to continue research new drugs? by you?

kiba 8y ago
Seems like we're running into incrementally diminishing return with the current approach in drug research.
snarfy 8y ago
I'm not sure where that $1.5B figure came from but the caveat I've always heard that came along with it is that drug companies pay less than 10% of the actual research costs. The rest is made up from government grants and university research. They mention the total costs to make themselves sound like victims.
- aaavl2821 8y ago
  That is simply not true. The $1.5B is cost spent to get a single drug approved and includes cost of failure, i.e. Spend on drugs that end up not getting approved. The data that supports this comes from a sampling of pharma company r&d spend The NIH funds about $30B in research each year, NSF about $7B. The top 15 pharma companies spend ~$70B on r&d a year. VCs invest $10-15B / year as of the last few years. Globally all pharma companies spend over $200B on r&d
arountheworld 8y ago
Is it known why that costs so much and that the cost isn't artificially inflated to justify the patents or other reasons?
- deleted 8y ago
  [deleted]
- User23 8y ago
  Clinical trials up to FDA standards are expensive.
- aaavl2821 8y ago
  This is the seminal and oft-cited source of those estimates for cost of drug development. The data comes from internal financial records at pharma companies. This is a 2010 paper and costs have since increased: https://www.nature.com/articles/nrd3078 https://www.nature.com/articles/nrd3078 Bottom line is that it is expensive to develop drugs because most of them fail. You need to spend millions of dollars on dozens of drugs that don't work in order to get one drug approved. The single biggest cost driver is cost of Phase 2 failure. Basically when a drug that works in animals doesn't work in people. It costs $40-50M+ and takes 5-7 years to get through phase 2 and over 60% of phase 2 studies fail This is because biology is hard. So the fundamental reason drugs are expensive is because biology is hard You can also look at high level financial metrics compared to new drug approvals to get an orthogonal way of assessing r&d productivity. The top 15 pharma companies spend a combined $70B on r&d per year. In 2017 only 49 new drugs were approved and only like 40% of those were developed by big pharma (the rest were developed by startups that were acquired by big pharma, or developed by mid size pharma). Even if all 49 of those drugs go on to make $1B a year, that will still not return a profit to even just the top 15 pharma companies Also most of those drugs are developed for cancer or rare disease bc the economics of developing drugs for those conditions actually work. For things like cardiovascular disease, stroke, or psychiatric disease, where the economics don't work out, you see very few new drugs despite massive need for better treatments. This has nothing to do with patents and everything to do with the cost of r&d. If pharma companies could develop a new heart drug for cheap and get some lame patent protection to give them a monopoly they would do it
vuln 8y ago
They'll spend more than $1.5B on advertising for that wonder drug.
- shadowtree 8y ago
  you 4-6 years to recoup a couple billion in cost and have to make a profit. how do you do that without any marketing and sales?
- Fuckyourself 8y ago
  R&D isn't advertising. This is public information because many biotech companies are publicly listed. https://en.wikipedia.org/wiki/Cost_of_drug_development https://en.wikipedia.org/wiki/Cost_of_drug_development https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Find... All you have to do is google "average drug development cost" how hard is that?
marcosdumay 8y ago
I would love to see a break-down of those 1.5B. How can one company even organize the spending of that kind of money?
- aaavl2821 8y ago
  You can go to the SEC EDGAR website and search for 10-K filings for large pharma companies -- Roche, Novartis, Pfizer, Merck etc. they summarize their financials including r&d spend. Most big pharma companies spend $5-12B / year on r&d and it can take 10 years to get approval
jkbyc 8y ago
The related trend is called the Eroom's law: https://en.wikipedia.org/wiki/Eroom%27s_law https://en.wikipedia.org/wiki/Eroom%27s_law https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large (graph, "Overall trend in R&D efficiency" from https://www.nature.com/articles/nrd3681 https://www.nature.com/articles/nrd3681 ) or https://www.google.com/search?q=eroom%27s+law&source=lnms&tbm=isch https://www.google.com/search?q=eroom%27s+law&source=lnms&tb...

anon49124 8y ago

Yes, the "free-for-all" sucks. Shkreli-style and worse profiteering on illness, misery and bankrupting people. And this reminds me: there are long off-patent generics costing $10 USD/pill ($300/mo). Isn't this crazy, even considering regulatory and medium-overhead operations? Doesn't this seem like a reasonable social-enterprise opportunity for non-hospital-/non-insurance-owned, employee- & customer-owned co-op generic pharmaceuticals for the US market at a minimum? Fixed margins on products based on production costs and overhead... but with enough investment so it can't get "DRAM price war"ed butt-kicked.

onetimemanytime 8y ago
>>"And this reminds me: there are long off-patent generics costing $10 USD/pill ($300/mo). Isn't this crazy, even considering regulatory and medium-overhead operations?" The worst part, you can get the same drug for pennies outside USA. The drug that probably US companies or research invented.
- thrower123 8y ago
  Or in some cases, the same prescription for your cat or dog at a fraction of the price, in the states. For the same pills.
- basicmedicines 8y ago
  > The worst part, you can get the same drug for pennies outside USA. The drug that probably US companies or research invented. I have direct personal experience with this, as an American living in the Netherlands. My youngest kid recently had worms appear in her poo. I called up the doctor's office and got a straightforward direction over the phone: go to any pharmacy, ask for mebendazole, give her one pill directly and one more after 2 weeks. No prescription necessary, no doctor's visit necessary unless worms persisted after the second dose. I went to the pharmacy. The medication - 2 doses - was 90 cents. Problem solved. Out of curiosity, I looked up the medication online. It's generic now, having been first marketed in the early 70's. It's considered one of the two standard de-wormers for humans and is on the WHO list of essential medicines. In America, it costs somewhere between $200 and $400 per dose (i.e. double that for a course of treatment.) Why? Because one generic maker (Impax) has cornered the US market. And it would have required a doctor's visit and prescription to acquire. US health care is so fucked.

aaavl2821 8y ago

This article is sort of light on substance and talks a lot about the evils of useless patents without really looking at the broader financial picture, or looking at the real bad actors The real bad actors are companies like Martin shkrelis, or some generics companies that take advantage of regulatory loopholes to sustain monopolies long after the patent expiry. Epipen is the most well know example; acthar gel is another. However for these drugs patents aren't really as much the issue, it's more a regulatory gray area bc FDA has not provided a clear path to developing genetic versions of "complex" drugs The "lifecycle management" patent games mentioned in the article largely no longer work. In general an insurance company won't pay a lot more for a caramel tasting biofilm vs a lime flavored one, or for other trivial innovations that don't improve clinical outcomes. Drug companies file the patents and try to squeeze out gains, but it isn't really that viable of a strategy anymore The only time this actually results in a company being able to charge high prices after the primary patents expire is when there is a new patentable innovation that actually makes patients healthier. A good example is Raptor Pharmaceutical and their drug Procysbi. The drug treats cystinosis, a rare genetic disease that affects young children, impairing growth, and can cause rickets, blindness and acidosis and lead to complete kidney failure by age 10 A generic drug, cysteamine, was used to treat the disease. However it was not a great drug for patients, I think it required 4x day dosing so kids had to wake up like twice in the night to take their meds, resulting in a lot of missed meds, and it also smelled bad (again these are kids taking the drug, if it smells bad they will fight taking it). Procysbi was an improved formulation of cysteamine that was easier for patients to take -- they didn't have to wake up in the night to take it. They did a clinical study showing it was just as effective as cysteamine with less nausea and vomiting but they did not design the study for superiority (ie they did not measure whether improved adherence led to better outcomes), although all but 1 patients chose to stay on Procysbi after the study The company that developed Procysbi charged like $200k / year for it. It was a much better drug for really sick patients, and the company did actual research, but the generic was $8k a year. By the way, the disease affects 500 people in the US / year, and the company treated a significant portion of that population for free during its clinical studies The drug made 500 sick kids healthier, and would never have existed if the company could not charge a high price (again, total market size of 500 patients) I think it's clear that I support this type of work but I understand that some people might rightly view this as unfair. However I think this example is a much better example of the "lifecycle management strategies" that actually work today than the ones referred to in the article For more about Procysbi see here: https://camargopharma.com/2013/05/raptors-procysbi-costs-more-than-a-generic/ https://camargopharma.com/2013/05/raptors-procysbi-costs-mor...

deleted 8y ago

[deleted]