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More on America’s Pharmaceutical Plight

January 5th, 2007

I wrote earlier this year my thoughts on Doctors and the pharma industry in general, see Doctors Have Sold Us Out. A new report from the GAO concludes that the current patent law stifles drug innovation and allows for obscene profits for very minor changes to existing drugs. Let’s take a closer look at how this works:

Drug Patents
Pharmaceutical companies receive patents on a new drug which covers the innovation for a period of 20 years. One could argue that this alone should be reduced for the pharmaceutical sector, as this time far exceeds what is needed to recoup R&D costs (just looks at the profits for the big pharma companies recently). Furthermore, drug companies routinely use slight adjustments or new uses for an existing drug to receive patent extensions, keeping cheaper generic drugs out of the public reach for 25 years or more. Experts believe these privileges “allow companies to make significant profits while reducing the incentive to develop more innovative drugs”. Examples were given where drug companies would turn a tablet into a capsule shortly before patent expiration in order to receive further market exclusivity.

The study concluded that in the past decade, 60% of patents were for these so-called “me too” drugs, a variation of a drug already on the market. While I guess it’s good to have 7 choices of cholesterol medicine instead of three, the report concluded that much of the R&D budgets of pharmaceutical corps are doing just that, and raking in a ton of dough in the process. So while medicine costs increase, the overall good provided to the market remains stagnant. As Senator Durbin said, “Most troubling is the notion that pharmaceutical industry profits are coming at the expense of consumers in the form of higher prices and fewer new drugs.”

Tyson Politics, Technology

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