Using Patents To Needlessly Drive Up Healthcare Costs: The Economic Impact Of Evergreening Drugs

from the evergreening-profits dept

Thu, Jul 18th 2013 4:39am — Glyn Moody

One technique in the world of pharma that has started appearing here on Techdirt is "evergreening" -- making small changes to a drug, often about to come off patent, in order to gain a new patent that extends its manufacturer's control over it. The advantages for pharma companies are evident, but what about the public? What economic impact does evergreening have? That's what a fascinating new paper in the open access journal PLoS Medicine seeks to establish:

The researchers identified prescriptions of eight follow-on drugs issued by hospital and community pharmacists in Geneva between 2000 and 2008. To analyze the impact of evergreening strategies on healthcare spending, they calculated the market share score (an indicator of market competitiveness) for all prescriptions of the originally patented (brand) drug, the follow-on drug, and generic versions of the drug. The researchers then used hospital and community databases to analyze the costs of replacing brand and/or follow-on drugs with a corresponding generic drug (when available) under three scenarios (1) replacing all brand drug prescriptions, (2) replacing all follow-on drug prescriptions, and (3) replacing both follow-on and brand prescriptions.

And here's what they found: Using these methods, the researchers found that over the study period, the number of patients receiving either a brand or follow-on drug increased from 56,686 patients in 2001 to 131,193 patients in 2008. The total cost for all studied drugs was €171.5 million, of which €103.2 million was for brand drugs, €41.1 million was for follow-on drugs, and €27.2 million was for generic drugs. Based on scenario 1 (all brand drugs being replaced by generics) and scenario 2 (all follow-on drugs being replaced by generics), over the study period, the healthcare system could have saved €15.9 million and €14.4 million in extra costs, respectively. The researchers also found some evidence that hospital prescribing patterns (through a restrictive drug formulary [RDF]) influenced prescribing in the community: over the study period, the influence of hospital prescription patterns on the community resulted in an extra cost of €503,600 (mainly attributable to two drugs, esomeprazole and escitalopram). However, this influence also resulted in some savings because of a generic drug listed in the hospital formulary: use of the generic version of the drug cetirizine resulted in savings of €7,700.
Obviously, this is just one study, in one area, although on the plus side it involves quite a long time period, and many patients. Despite its limitations, it nonetheless offers a useful first analysis of the economic impact of evergreening drugs. It's certainly an aspect of drug prescription that hospitals and doctors need to consider. As the study concludes: Evergreening strategies have been successful in maintaining market share in Geneva, offsetting competition by generics and cost containment policies. Hospitals may be contributing to increased overall healthcare costs by listing follow-on drugs in their RDF. Therefore, healthcare providers and policy makers should be aware of the impact of evergreening strategies.
That suggests we can expect to see many more evergreened drugs in the future as highly-profitable compounds start to come off patent, and pharma companies search for ways of maintaining their high profit levels.

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Filed Under: drugs, evergreening, healthcare, patents, pharma

25 Comments

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Anonymous Coward, 18 Jul 2013 @ 4:51am

the only way that there will be any change to this practice is to do exactly the same thing that needs to be done with the entertainment industries monopoly.

1) stop those in Congress from getting kick-backs from the industries concerned

2) stop those in Congress, when finishing their duties for whatever reason(s) from immediately (if not earlier!) being employed in the respective industries as a way of saying 'thank you for all you did for us, even though it fucked up the systems and the customers'
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Anonymous Coward, 18 Jul 2013 @ 5:16am

They "evergreen" a drug and this, according to articles such as yours, is "bad, bad, bad". Perhaps this causes some problems, but please answer one question. Now that a patent/patents on the original drug have expired, just what is it that keeps others from manufacturing, using, selling, offering to sell, and importing that drug?
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Jim L, 18 Jul 2013 @ 5:17am

biological drug
My wife has MS and the only treatments are biological drugs which by law will never be generic. The same treatments that came out 13 or 14 years ago in the $24K - $25K range are now in the $50K - $54K range. How does that happen? No competition, that's how.
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Anonymous Coward, 18 Jul 2013 @ 5:22am

Re: biological drug
plus no one of any power giving a flyin' fuck either! those same people would be kicking up murder if they couldn't get something that they or one of their family needed. everyone else can curl up and die as far as they are concerned. less people alive, means more money to waste on some other 'get rich quick' scheme they come up with!
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Pragmatic, 18 Jul 2013 @ 5:25am

Re: manufacturing, using, selling, offering to sell, and importing drugs that are not patented
Nothing. They are effectively in the public domain, so anybody can. Branded drugs continue to sell because people tend to trust brands and "As seen on TV."

http://en.wikipedia.org/wiki/Paracetamol

Public domain status doesn't stop anyone from making money on a product whether they created it or not.
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Anonymous Coward, 18 Jul 2013 @ 5:32am

Remember kids, this is the same phramacutical industry that is constantly trotted out as the poster child for patents. The same industry they claim would simply not work without them and the only way to spur research and development into lifesaving medications is via patents. The next time someone spouts off this bullshit remember that what patents actually do is create perverse incentives for wasting R&D time making a drug that can be patented regardless of if the new drug is useful for any other reason.
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Anonymous Coward, 18 Jul 2013 @ 5:34am

Re:
You're missing the point. If the groups doing the groundbreaking work are the name brands with the patents then R&D time and money that could be spent on developing remedies that are actually new is wasted on this bullshit.
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Anonymous Coward, 18 Jul 2013 @ 5:38am

Re:
As a doctor in a litigious society which do you prescribe, the generic version of the old drug, or the new improved version?
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Anonymous Coward, 18 Jul 2013 @ 5:47am

Re:
" just what is it that keeps others from ......."

Pay for Delay

http://www.ftc.gov/opa/reporter/competition/payfordelay.shtml
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Anonymous Coward, 18 Jul 2013 @ 5:48am

"but what about the public?"

They obviously do not care.
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Anonymous Coward, 18 Jul 2013 @ 6:34am

Re: Re:
Why they don't just ask the patient?
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Anonymous Coward, 18 Jul 2013 @ 6:47am

Re: Re:
I see. Once a drug passes from protection under a patent the former patent holder should simply stop any further development associated with the drug (perhaps to differentiate it from the competition), sell only what it was selling before, and move all its R&D money into new areas of exploration. No business that wants to stay in business follows such a protocol.
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Anonymous Coward, 18 Jul 2013 @ 6:53am

Re: Re: Re:
Wait ... they are unable to compete without their "special government granted protections"?

What kind of business is this anyways, sounds like a scam.
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Anonymous Coward, 18 Jul 2013 @ 7:10am

Re:
"others from manufacturing, using, selling, offering to sell, and importing that drug" is exactly what generic drugs are.

http://en.wikipedia.org/wiki/Generic_drug
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Anonymous Coward, 18 Jul 2013 @ 7:12am

Re: Re:
If you're any good as a doctor, you prescribe them either what works best, or what works best that they can afford. So which you would Rx would vary from patient to patient.
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Joe Dirt, 18 Jul 2013 @ 8:03am

Re: Re: Re:
You miss the point.
Most of these changes offer no additional benefit to the patient. They are just a small benign formula change in an effort to claim it's "New and Improved" so they can reap the benefits of an extended patent.

I would equate it to changing the height of lettering on a set of radial tires and calling it "New and Improved".
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Anonymous Coward, 18 Jul 2013 @ 8:26am

Re:
.... also the same Pharma industry that wanted to stop South Africa from being able to treat HIV. With a moral compass like that why the fuck would you trust them.
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Wolfy, 18 Jul 2013 @ 8:54am

There is nothing "needless" in driving up healthcare costs... it does one important thing. It further enriches the wealthy dynasties that control the major enterprises in the US. It would be unthinkable that their great, great, great, great grandchildren should be born without power and influence.
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Anonymous Coward, 18 Jul 2013 @ 9:48am

Re:
So it's a case of, "meet the new �lite, same as the old �lite"?
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ECA (profile), 18 Jul 2013 @ 11:55am

I find this strange.
REALLY strange..
IF corp1, makes a drug, it gets the copyrights.

IF' corp2 Uses the basis of this drug and makes a change to it(making it a different Combo drug) they get SUED into the ground.

If corp1 gets to the end of copyright, they can ADD the same change CORP2 was trying, and KEEP the copyrights??

So, we make drug1..(and dont change/add/make better) and wait for the Copyright END, then add enteric coating to make it more digestible and it works better in the lower intestines. AND get a NEW copyright..
AND corp2 Couldnt do it without getting BEAT TO DEATH..
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out_of_the_blew_donald_trump, 18 Jul 2013 @ 5:42pm

That sucks :( but luckily for me Methadone is dirt cheap and a million times better than SUBOXONE. No clue why Uncle Sam gives me a drug that keeps me so high I cannot think straight for free. In fact it's so strong they give me disability on top of it. Not that I'm complaining about living a very easy and happy life.

If they gave me SUBOXONE on the other hand I'd probably still be working. But Methadone is free and SUBOXONE is over 700 dollars a month which I can afford but I refuse.
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chuck, 20 Jul 2013 @ 6:33am

Response to: Anonymous Coward on Jul 18th, 2013 @ 5:16am
" Now that a patent/patents on the original drug have expired, just what is it that keeps others from manufacturing, using, selling, offering to sell, and importing that drug? "

Nothing, and this is the way things are supposed to be. The patent system was never intended to give you a PERPETUAL monopoly. Patent protection in the US is 20 years, which is one of the longest in the world. How much more of a monopoly do you want?
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Renee Jones, 20 Jul 2013 @ 8:31am

evergreening patents
Trivial changes are not legally entitled to patents, but Rader and his clowns are so ideologically minded that they believe it is their duty to rewrite the law to give government-sponsored monopolies to every fleeting thought. They are so bone-head stupid that they think adding 2 and 2 to get 4 is an earth-shattering discovery. It is so hypocritical to see republicans scream about the power of the free market and then claim the market is incapable of accomplishing anything without government-protected monopolies. We complain about drug costs, then pass patent laws to make them more expensive. How stupid are we?
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Anonymous Coward, 20 Jul 2013 @ 10:17am

Re: Response to: Anonymous Coward on Jul 18th, 2013 @ 5:16am
Mine was a rhetorical question precisely because with expiration comes the right of others to exercise previously exclusive rights. To say or suggest that "evergreening" effectively extends exclusive rights associated with the original invention is, of course, manifestly a misstatement of the law.
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Bea, 4 Aug 2013 @ 11:13am

evergreening patents
Coupons and rebates on brand names and evergreen drugs are a common tool used to sway the opinions and future recommendations of health care professionals at hospitals.
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