In a Health Affairs article, Alfred Engelberg explains that over the course of the last 35 years, Congress has extended the monopoly power of pharmaceutical companies in five different ways. These extra drug company monopolies were intended to spur drug research and innovation. They certainly have added significantly to drug company profits and forced Americans to pay more for their drugs for way longer than reasonable. Whether they have spurred innovation is an open question. So, why should drug companies have extra monopolies?
The argument for drug company monopolies is that, without them, drug companies would not perform the research needed to discover new life-saving and health-promoting drugs. Research costs too much. As it turns out, drug companies only spend about 10-20 percent of their revenue on research and development. And, additional monopolies are unnecessary, except of course to generate monopoly profits.
Here are the five extra drug company monopolies that do not apply to other industries:
- Generic versions of their orphan drugs are prohibited for at least seven years; generic versions of new small molecule drugs are prohibited for five to seven years; and biosimilars (generic versions) of new biologic drugs are prohibited for 12 years.
- They can extend their patents of new drugs approved between five and 14 years.
- They can extend their patents for six months if they conduct research to learn whether a drug is suitable for children.
- They can delay FDA approval of generic and biosimilar versions of their drugs if they simply claim that the company manufacturing a generic or biosimilar drug is infringing their patent, even if there is no basis in fact for their claim.
- They can secure monopoly power over drugs they did not discover–drugs discovered through government research and funding–and to charge whatever they please for these drugs.
Here’s more from Just Care: