JAMA published an analysis on U.S. drug prices that concluded that Americans are paying more than double in medicines regarding other countries due to monopolies. U.S. laws protect new products in the pharmaceutical market for long periods of exclusivity, leaving the decision on how high the price should be to the only company that sells the product.
On Tuesday, the Journal of the American Medical Association (JAMA) made public its analysis about the reason behind high prices for medicines in the U.S. The conclusion: Monopolies in the pharmaceutical market. According to three doctors affiliated with Harvard, the leading cause of the existence of patents in the pharmaceutical industry is the American government.
U.S. politics give drug companies launching a new product market exclusivity for too extended periods of time, banning competitors from the market.
Americans spent more than double the average of $400 than in 19 other industrialized countries. U.S. patents and other market protection allow a monopoly in the pharmaceutical industry. Hence, the prices only go up. In 2013, drug spendings in the United States were $858 per capita, according to the JAMA article.
Without competitors, there cannot be a balance regarding what the consumers are willing to pay and the product’s worth, leaving the decision of the price to the company. And because these laws make them the only laboratory manufacturing a particular drug, people are forced to buy it. The American people do not have another choice.
The authors of the JAMA article stated that drug prices in the U.S. had had a relatively modest pace in the early years of the present decade because patents expired on many widely used medicines and generics enter the market. But due to patent expiration prolongations and the approval of more costly drugs, patients and insurers are struggling to get access to recipes.
Dr. Aaron S. Kesselheim agrees that the ability of pharmaceutical companies to set such high prices comes from the market exclusivity that the U.S. government grants them. He added that it should be studied the conditions for these exclusivity periods and make sure they do not provide excessive protection. Kesselheim is an internist and director of the Program on Regulation, Therapeutics, and Law at Boston’s Brigham and Women’s Hospital.
Kesselheim said in an interview that drug companies do need a certain degree of protection when they are launching a new product to the pharmaceutical market. The problem is that now, those medicines are priced according to what the market will bear rather than on a company’s research outlays.
There are two forms of government protection to drug enterprises in the U.S.: the first one are patents, and the second one exclusive rights. Patents for drugs in America run for 20 years, starting from the time they are filed. Exclusive rights protect the data that resulted from clinical trials of experimental drugs, and they extend the patent for five to 12 years, depending on the product.
Patents and exclusivity on data block the entrance of generics to the market, which are significantly less expensive than branded drugs. Some companies have managed to prolong their market protection through questionable “pay for delay” agreements, says Kesselheim.
Paying for delayed settlements gives competitors a financial incentive to postpone launching generic drugs, leaving no choice to Americans but buying the expensive prescription therapies.
Another tactic criticized by Dr. Kesselheim is when pharmaceuticals extend their patent protection by winning new patents on drugs with a slight modification on the dose and formulations.
JAMA authors, other physicians, and lawmakers propose different solutions to reduced drugs high costs
One of the solutions discussed was to give Medicare, U.S. largest health insurer, the power to directly negotiate prices with drug makers. This kind of market freedom will allow patients to import medicines from Canada and prevent pharmaceutical companies in the U.S. from blocking generics into the marketplace.
Sen. Amy Klobuchar is co-sponsoring several bills that seek to enable Medicare to price negotiations. This initiative is also back up by Hillary Clinton and Donald Trump. JAMA authors agree that this will only be part of the solution.
The other strategy that could control the high prices on the pharmaceutical market is to moderate the periods of protections and the data exclusivity to increase competence and balance the costs.
Biopharma industry leaders argued that the only thing that makes America the country with more medical breakthroughs in their domestics labs are the rights to extensive protections and extended data exclusivity.
For Mark Grayson, deputy vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, if the climate for innovation is cloudy, companies will find somewhere else to go. Grayson says that U.S. protections guarantee people they can recover their investment and most important, they are the reason people invest in the pharmaceutical sector in the first place.
But Kesselheim states that the majority of drug innovations happens in academia and government laboratories either way, and there is enough evidence to prove it. This being the case, Dr. Kesselheim thinks that regulation for the market to achieve rational drug prices would not necessarily reduce innovation, as long as public funding of science continues to be sent to Universities and government labs.
The Verge reports that Ben Handel, a health care economist from UC Berkeley, believes that strategies for cutting medicine costs should not be limited to drugs. Handel says they should be applied to the whole health sector to see a permanent long term result.
Source: The Boston Globe