Argument for Decreasing the Length of Pharmaceutical Patents

Overview

While there are a variety of factors that contribute to the high prices of prescription drugs in the United States compared to other countries, the lengthy duration of pharmaceutical patents and the extensive requirements for approval by the Food and Drug Association (FDA) are important aspects. The proposed solution of reducing the length of new drug patents by 5 to 7 years intends to allow cheaper generic medications to become more quickly available. However, this reform has the potential to have far-reaching consequences on the development of new pharmaceuticals. In taking a stance on this legislation, it is first important to understand both the drug patent process and the process of researching and developing a drug in the United States.

A patent is defined as “a property right issued by the United States Patent and Trademark Office to an inventor “to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” for a limited time, in exchange for public disclosure of the invention when the patent is granted” (FDA, 2020). In the pharmaceutical industry, this is essentially a protection for the drug developer that prohibits another company from making or selling that drug for the duration of the patented period. Therefore, patents provide manufacturers with market power; they can set a price high because there is no allowable competition (Feldstein, 2018). This degree of control is essential in generating a profit for the company to offset the cost of the extensive research and development process. Once a patent expires, other companies can create generic versions of the drug, obtain approval via the FDA’s abbreviated new drug application, and bring their form to market (FDA, 2020). The influx of generic versions, and thus competition, into the market in the period following a patent’s expiration subsequently decreases the price of the drug. The company that originally manufactured the drug loses the ability to sell its drug at a high price and thus its profits decline. Currently, US drug patents last for 20 years from the filing of the application (National Institutes of Health, 2016). However, the company does not get to market its drug and earn a profit for the full duration of the patent because of the lengthy approval process that the FDA requires, which occurs during the patent period.

It is also vital to understand the FDA approval process because it greatly reduces the time during the 20 years of patent protection that the drug can actually be sold. The FDA requires stringent guidelines to be met to ensure the safety and efficacy of any drug that is brought to market. These requirements are performed by the company seeking approval for a drug and thus pose an increased cost to drug development (Feldstein, 2018). Upon discovery of a potential drug, a pharmaceutical company must first perform laboratory and animal studies to investigate the compound and file an Investigation New Drug Application with the FDA (FDA, 2020). It is during this time that a patent is usually obtained and thus the 20 year countdown until its expiration begins. Next, the company must perform three phases of human clinical trials to demonstrate effectiveness and safety in a large group of participants. This research is a time intensive and expensive process that the company invests in hopes of being able to eventually market the drug. After completion of the trials, the company compiles a New Drug Application which is reviewed by the FDA’s Center for Drug Evaluation and Research (FDA, 2019). The examination of the research involves analysis of the target condition and the currently available treatments, an assessment of the benefits and risk of the drug from the clinical data, and ultimately a decision on whether to grant approval (FDA, 2019). This process can also take time, cutting away from the patented time that can be used to sell the drug, and thus profits for the company. All in all, the drug development, testing, and approval process considerably diminishes the time that the company is able to have control of the market of a drug they first manufacture.

A pharmaceutical company can attempt to extend its marketing rights of a drug by applying for exclusivity with the FDA. If granted, exclusivity can delay or prohibit competitor drugs from being approved and thus prolong the market power of the company that originally developed the drug (FDA, 2020). There are several types of exclusivity that vary in length from 6 months to several years. For instance, Orphan Drug Exclusivity can be awarded to drugs that treat diseases affecting fewer than 200,000 people, New Chemical Entity Exclusivity can be obtained by a drug that contains no active compound yet approved by the FDA, and Pediatric Exclusivity can be obtained for drugs designed for pediatric patients (FDA, 2020). Exclusivity is one way that pharmaceutical companies can extend their market power despite the lengthy drug development process.

The legislation to reduce the length of new drug patents, thus allowing cheaper generics to enter the market sooner, has potential positive effects but also important consequences. This law would limit the duration of the monopoly of a pharmaceutical company over a drug which would allow for earlier competition and a corresponding reduction in drug prices (FDA, 2020). This would benefit patients who use drugs because they would be available at a lower price; some people who could not afford medication before would now have access and the price would be less of a burden to those who had purchased the medication before. However, patents are an important incentive for research and development. They encourage companies to make the investment to develop new pharmaceuticals because they provide them with greater security that they will make a profit. If patent lengths are reduced, the potential profits of developing new drugs are thus reduced and companies will be less willing to devote time to new potential drugs. Therefore, it is likely that there will be a decrease in the number of innovative drugs that are developed after this law is implemented (Feldstein, 2018).

Stakeholder Analysis

Patients Utilizing Drugs

Patients who use one or more prescription drugs would likely favor this legislation because it would lower the prices they pay for their prescriptions. Decreased drug prices would make illnesses, especially chronic conditions, less of a financial burden on patients, especially those who pay for their healthcare out of pocket. Additionally, lower drug prices would expand access to those who could not afford it previously. Your support of this legislation would garner the support of millions of patients taking expensive prescription drugs. It is also important to note that the elderly, who represent a large population of voters, often use several prescriptions and would accordingly gain the most benefit from having reductions in drug prices. This is a key population whose support could be important in future campaigns.

Doctors and Other Healthcare Providers

Doctors and other healthcare providers, specifically those who prescribe medications, would likely support this legislation as well. Reducing the duration of drug patents would decrease drug prices for their patients which would lead to better compliance with treatment. If patients are more amenable to taking their prescriptions, healthcare providers will witness better treatment outcomes and greater success in their practice. Additionally, better management of disease will lead to decreased healthcare costs which are highly appealing to those involved in healthcare practice and administration. Through their many professional organizations, such as the American Medical Association, members of this group have important political power that could be an important backing for future elections.

Pharmaceutical Companies

It can be expected that pharmaceutical companies would be adamantly against this legislation because it would ultimately reduce its profits. A decrease in the patented period would decrease a company’s duration of market exclusivity on a drug and thus lower their profits. The time from initial drug development studies to actual marketing can be as long as 10+ years, and thus limiting patents by 5-7 years would leave little time for the companies to exclusively market a new drug and make a profit (Feldstein, 2018). This would make the legislation unpopular among those who create, test, manufacture and market drugs. Importantly, pharmaceutical companies can have considerable political power and you could potentially lose their support if you vote for this legislation.

Stance

All in all, you should support this legislation because it would gain you the most political backing overall. Although the pharmaceutical companies have great political power, the support you receive from the other groups in favor of this legislation would be more substantial. The medical establishment through organizations such as the American Medical Association and others would provide strong backing to your reelection. Additionally, the support of patient populations utilizing drugs, specifically the elderly who comprise a significant percentage of voters, would support you because of this legislation. You should support decreasing patent length by 5-7 years because of the approval you will receive from those who are seeking more affordable pharmaceuticals.

References

Feldstein, P. J. (2018). Health policy issues: An economic perspective (7th ed.). Health Administration Press.

Food and Drug Administration. (2019, October 28). Development and approval. US Food and Drug Administration. https://www.fda.gov/drugs/development-approval-process-drugs

Food and Drug Administration. (2020, February 5). Frequently asked questions on patents and exclusivity. US Food and Drug Administration. https://www.fda.gov/drugs/development-approval-process-drugs/frequently-asked-questions-patents-and-exclusivity

National Institutes of Health. (2016, December 12). How are drugs approved for use in the United States? US Department of Health and Human Services. https://www.nichd.nih.gov/health/topics/pharma/conditioninfo/approval