The government needs to better protect consumers from high prescription medication costs by setting tougher standards for companies seeking drug exclusivity protection for their brand name products, according to a study.
Researchers in an analysis published Tuesday in JAMA found that market exclusivity through lengthy government patent protections and the inability of public payers such as Medicare to negotiate for lower prices were the most significant causes for rising drug costs. Prescription drug costs make up between 10% and 17% of total healthcare costs.
Drug patents typically receive 20 years of protection from the time they are filed, though much of that time is spent developing the medication. In addition, a new drug can get from five to seven years of market exclusivity by the Food and Drug Administration before a generic version can be sold. An additional three years of exclusivity can be awarded if a change is made to the product that required clinical trial work. Drugmakers can also receive another six months of exclusivity if their product is approved for use in children.
The average length of market exclusivity can range from 12 years to more than 14 years for innovative, first-in-class types of products, according to the study. The introduction of a generic version of a drug into the market is often delayed due to drug manufacturers seeking additional patents for changes. Other practices, such as the so-called “pay for delay” actions by some drug companies to delay or prevent generic competitors from entering the market, have contributed to keeping the cost of prescriptions medications high.
Such factors have resulted in brand-name medications accounting for 72% of total drug spending, according to the study, despite making up only 10% of all prescriptions filled.
“The most realistic short-term strategies to address high prices include enforcing more stringent requirements for the award and extension of exclusivity rights; enhancing competition by ensuring timely generic drug availability; providing greater opportunities for meaningful price negotiation by governmental payers; generating more evidence about comparative cost-effectiveness of therapeutic alternatives; and more effectively educating patients, prescribers, payers, and policymakers about these choices,” the study concluded.
Pharmaceutical firms have often justified the need to set high prices for their products by arguing that they offset the costs incurred for research and development, which they have contended can take hundreds of millions of dollars. Any requirement to lower drug prices could disrupt the pipeline for innovative breakthroughs.
But the study rebuts that argument, pointing out that drugmakers invest between 10% and 20% into research and development and even less when it comes to the development of innovative products.
“The contention that high prescription drug spending in the United States is required to spur domestic innovation has not been borne out in several analyses,” researchers found. “A more relevant policy opportunity would be to address the stringency of congressional funding for the National Institutes of Health, such that its budget has barely kept up with inflation for most of the last decade.”
