Drug companies have found a number of ways to take advantage of the FDA’s protocols for granting market exclusivity, prolonging the dominance of their blockbuster (perhaps we should call them “wallet-buster”) drugs. With each new drug approval, international pharmaceutical conglomerates enjoy new patents and market exclusivity, while their drug reps tell doctors that the new drug is the best (though with such unreliable safety data available, the only thing for certain is that a new drug is the most expensive).
The FDA has little incentive to do anything about these well-documented schemes, since extended periods of market exclusivity generate windfall profits for their clients, the drug companies, which, as we’ve seen, pay a substantial portion of the FDA’s bills.
Patent protection and market exclusivity
Patents are granted by the US Patent and Trademark Office anywhere along the development lifeline of a drug and can encompass a wide range of claims. Patents can last up to up to twenty years. On the other hand, market exclusivity is granted by the FDA upon its approval of a drug. These are exclusive marketing rights, and can run from 180 days, up to twelve years for specialty drugs, with different periods for different classes of drugs. Drugs can have patent exclusivity, market exclusivity, both, or none. It all depends on what criteria they fit.
Current market exclusivity is five years for conventional drugs and twelve years for specialty drugs and biologics. This is after FDA approval and is on top of the grant of a government monopoly conferred by the patent. Specialty drugs are drugs for which there is deemed to be an unmet medical need, usually due to the complexity or limited extent of the disease. They are very expensive niche therapies for relatively rare conditions (representing only about 1% of prescriptions), yet they now account for one-third of all drug spending.
One drug maker had an idea: reformulate two existing over-the-counter (OTC) pain relievers, perform relatively simple clinical trials on them, sell them by prescription and price them as though they are specialty drugs. Who wants to submit a drug that gets five years of monopoly when by tweaking the formula a bit you can get twelve years (or, if fifteen years, if some in Congress get their way)? Horizon Pharma holds the patents to two different NSAID pain relievers, both designed to not irritate the stomach. The medications, Duexis and Vimovo, are priced at more than $1,500 each for a 30-day supply. Yet they are also both combinations of drugs that are available without a prescription!
More and more drug applications to the FDA by drug companies are for “specialty drugs.” The FDA ensures that medicine will be dominated by drugs, then it enforces drug monopolies.
Some specialty drugs can be designated as “orphan drugs” which, similar to specialty drugs, are for extremely rare diseases that effect a small percentage of the population (Huntington’s disease, ALS, etc.). To incentivize pharmaceutical companies to develop drugs for these rare diseases, orphan drugs are granted additional market exclusivity, which can turn into a government-granted monopoly—with dire consequences. Consider the case of 17P, a drug used to prevent miscarriages that was produced cheaply by compounding pharmacies for years. After the FDA designated 17P an orphan drug, the pharmaceutical company with the exclusive rights increased the price from $10 a dose to $1,500—simply because they could.
The new Trans-Pacific Partnership deal will also extend and broaden certain patent and data protections for the pharmaceutical industry, which Big Pharma can then use to keep prices high and delay competition from generics. It is a wonderful gift to the pharmaceutical industry—but a grave loss to patients in developing countries looking for access to affordable drugs.
Drug companies employ another little scheme as well: they are able to apply for a patent extension on a drug simply by tweaking the formula a little.
An expedited approval process
The FDA allows itself to be pressured by drug manufacturers to expedite the approval process. Particularly when it’s touted as a groundbreaking new drug to treat a serious condition, the FDA can choose to speed up the review process and let drug manufacturers market their product as soon as possible and give the drug “fast track,” “accelerated,” or “priority” approval. They do this by enlisting the support of lobbyists, patient advocacy groups and lawmakers, and by working with the agency directly.
More than half (56%) of newly approved drugs now use an expedited-approval pathway. In fact, half of the FDA’s budget comes from fees paid by manufacturers to facilitate accelerated approval for new drugs and medical devices.
The FDA gives some new drugs a “conditional approval” and then requires the company to provide more data—but many companies fail to provide the data, and there is no penalty for their failure to do so.
What to do about generics?
Sometimes drug companies are more concerned about old drugs going out of patent protection than about getting new drugs approved quickly. The industry is facing the so-called “patent cliff”: dozens of popular, high-end drugs are expiring, costing drug manufacturers as much as $160 billion in sales.
Pharmaceutical companies also engage in so-called “pay for delay” schemes in which generic drug makers are paid off to delay bringing generic versions of drugs to market. Bayer AG paid rival drug makers nearly $400 million to stay out of the generic Cipro market. By paying competitors to delay their challenges to the patent, they are ensuring an exclusive market for themselves—and the ability to charge whatever they wish.
The FDA helps Big Pharma’s little generics problem in other ways as well. The FDA’s Office of Generic Drugs currently has an estimated 1,900 different generic medications awaiting action—and the approval time for generic applications has slowed until it averages more than twenty-six months. It’s foot-dragging at its best. By comparison, a New Drug Application takes an average of fifteen months, with some new drugs approved in as few as seven months.