Politico: How Big Pharma exploits markets and keeps drug prices high
6 Min Read
Politico explains how Big Pharma is doing everything it can to keep competitors off the market for as long as possible.
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A pharmacy employee at a pharmacy in New York on December 23, 2009. (Reuters)
Several Big Pharma companies use a mix of tactics including patents, market exclusivity, and data protection to keep generic competitors out of the market.
The Big Pharma system is controlled by a complicated set of laws that shield new branded pharmaceuticals from unbranded competitors for a short time in order to keep cheaper generic competitors at bay.
The term used to describe the practice of gaming the pharmaceutical system employed by such companies is called evergreening. It has the potential to add billions of euros to the financial sheets of pharmaceutical firms, while costing EU nations substantially in lost savings.
Big Pharma firmly denies any misconduct, but the European Commission underlined the need for better enforcement of competition regulations in a 2009 study to avoid evergreening. Little has changed since then.
Now, a leaked draft of the EU's revised pharmaceutical law suggests that the Commission is preparing to crack down on evergreening.
Politico has taken a look at the most prevalent ways to scam the system — and how Big Pharma's European lobby organization EFPIA responds.
On Patents
Some believe that one medicine equals one patent. However, in the United States, AbbVie, for example, applied for almost 250 patents for its arthritis medicine Humira. While a drug's basic patent protects its chemical makeup, there are a variety of conceivable add-ons that firms might use to delay imitation medications. They include production techniques, distribution systems, and medication doses.
According to EFPIA, the European Patent Office maintains strict requirements and does not grant patents on the spur of the moment. Nevertheless, proprietary procedures do not preclude generic companies from producing the medicine; they simply have to find other means to do so.
On courtroom tricks
Patents for add-ons can be contested in court. Yet when it appears that a challenge may be successful, some pharmaceutical corporations will further complicate matters by filing new patent applications with the European Patent Office. Each of these divisional patents is tied to a secondary patent, such as a manufacturing technique, and provides the same length of protection.
Even if a generics business successfully challenges the secondary patent — or, more often than not, the original company withdraws the patent before the challenge is won — generic firms must also fight the associated divisional patent. This process might take up to seven years.
Adrian van den Hoven, head of Medicines for Europe, the generics lobby group, says this strategy is often used to delay generic and biosimilar competition.
EFPIA states that the issue has been "blown hugely out of proportion," with divisionals accounting for around 10% of all new European patent applications. Divisional patents have the same expiration date as the connected parent patent and cannot make the same claims.
On rare disease groups
Medicines for uncommon disorders are given particular consideration, with a decade of market exclusivity. This means that if the European Medicines Agency approves a new drug for a condition that affects no more than five in 10,000 people in the EU, and for which no effective treatments are available — or if it adds significant benefit to existing treatments — copycat medicines must wait ten years to enter the market.
There are worries about Big Pharma's interest in subdividing common diseases and intentionally establishing uncommon disease groupings, or, "salami-slicing" in order to benefit from these incentives.
According to EFPIA, it is correct that illnesses are classified by kind as well as genetic variations, as this is scientific truth. In any scenario, when other therapies are available, incentives will only be provided for goods that clearly benefit patients.
On patent linkage
The so-called Bolar exemption is intended to limit patent authority. It enables unbranded pharmaceutical businesses to begin developing knockoff medications before patents on genuine drugs expire, allowing them to be ready to join the market when the time comes.
Yet, various EU nations have varying conceptions of how broadly the exemption should be used. In certain cases, generics companies can begin negotiating pricing with health authorities for cheaper alternatives even before they are formally launched. In others, however, including Germany, Italy, and Poland, patents can prevent reimbursement authorities from even speaking with generics businesses, a process known as patent linkage.
The EFPIA refutes that the Bolar exemption does not apply to price and reimbursement applications. Several generics companies are already releasing drugs in Central and Eastern European nations where intellectual property protections are in place, and broadening the Bolar exemption would encourage more of the same.
On enforced licensing
Compulsory licensing, in which governments can override patents and enable other businesses to manufacture a medication in an emergency, has long been viewed as an existential danger by the industry. Big Pharma has campaigned hard against implementation and has found a valuable friend in EU legislation - regulatory data protection. While mandatory licensing may compel pharma to divulge a medicine's formula, it is not required to provide data from drug trials, which a competing business requires to have its version authorized.
The industry has been vocal in its opposition to expanding the use of forced licensing. For example, in a 2019 submission to the United States government's yearly blacklist of nations that do not abide by its intellectual property norms, the pharmaceutical industry successfully fought to include countries that employ forced licensing in a way that they did not approve of.
The EU's pharmaceutical law may modify this, enabling data and market protection to be suspended in times of public health emergency.
The EFPIA says that firms that create a medicine should be permitted to bring it to market since they are the most knowledgeable about the technology. For good reason, compulsory licensing is a last-resort option, and "undue willingness" to use the policy weakens investor trust and hurts innovation.
