There are two forms of government protections that give drug companies temporary monopoly status on new brand-name treatments.
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Taking on one of the most contentious issues in health care, a trio of Harvard-affiliated doctors writing in a leading medical journal says long government-approved market exclusivity periods are the primary reason United States drug prices are more than twice as high as those in other countries. Jerry Avorn and Dr. Ameet Sarpatwari – reviewed more than a decade’s worth of medical and health policy literature in trying to understand the origins and impact of high USA drug prices.
Dr. Joshua Sharfstein, the Associate Dean for Public Health Practice and Training at the Johns Hopkins Bloomberg School of Public Health, said Kesselheim’s study provides a “bird’s eye view” of how the US became an outlier when it comes to drug prices, without getting lost in the weeds.
In the article, researchers explain that drug manufacturers automatically earn one type of market exclusivity upon FDA regulatory approval of a new product- a guaranteed period of about seven years before a generic competitor can be sold. Lower-priced copies of the branded drugs – called generics for pills and biosimilars for biologics – cannot enter the market until market protections have expired, which can often be a decade or more after the branded treatments first enter the marketplace. It’s a “very complex issue with lots of moving parts”.
New competitors must be introduced in the marketplace to make the prices drop. Drug patents typically receive 20 years of protection from the time they are filed, though much of that time is spent developing the medication. They found that the problem has deep and complicated roots and published their findings in JAMA, the journal of the American Medical Association.
We wanted to “present a bigger picture.to help inform [policy] making and thinking about the subject”, Kesselheim told ABC News.
Drug makers charge high prices for drugs thanks largely to “market exclusivity” regulations meant to allow them to recoup the research and development costs for new breakthrough medications, said senior author Ameet Sarpatwari.
Campbell pointed out patients in Europe may wait longer to get access to cancer medicines compared to patients in the United States and have access to far fewer medicines.
In a new report, three doctors from Brigham and Women’s Hospital and Harvard Medical School discuss the origins and effects of high drug prices in the United States. The proportion of revenue of the ten largest pharmaceutical companies that is invested in research and development is only about 7 to 21 percent, according to the review.
In many countries with national health insurance systems, a delegated body negotiates drug prices and will not cover products if cost-to-benefit calculations are unreasonable. However, in the U.S the bargaining power of the payer is constrained for various reasons. Moreover, the justification and outcomes of drug prices in the USA were examined. “Prescription medications now comprise an estimated 17 percent of total health care costs, and prescription medication coverage constitutes 19 percent of employer-based insurance benefits”. There have been isolated examples of aggressive price negotiation but it is not common, according to the researchers.
“High drug prices have important clinical consequences”, Kesselheim said. “The most realistic short-term strategies to address high prices include enforcing more stringent requirements for the award and extension of exclusivity rights; enhancing competition by ensuring timely generic drug availability; providing greater opportunities for meaningful price negotiation by governmental payers; generating more evidence about comparative cost-effectiveness of therapeutic alternatives; and more effectively educating patients, prescribers, payers, and policymakers about these choices”, the study concluded. Physician prescribing choices, when comparable alternatives are available at other prices, are another big contributor to drug spending.
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“I think the most significant thing about this is not necessarily what he’s saying but who he’s saying it to”, said Kenneth Kaitin, who directs the Tufts Center for the Study of Drug Development.
