For the unaware (and I'll admit that I'm mildly aware), the Orange Book is an FDA listing of all the "exclusivities" that companies claim related to their New Drug Applications (i.e., their drugs). These exclusivities might relate to patents associated with the drug, research related to the drug, approval to use the drug on new populations or for "orphan" (low incident) diseases.
Feldman and Wang argue that the Orange Book has been used by companies to "evergreen" their drugs - that is, to extend exclusivity beyond patent expiration. The paper is on SSRN and the abstract is here:
Why do drug prices remain so high? Even in sub-optimally competitive markets such as health care, one might expect to see some measure of competition, at least in certain circumstances. Although anecdotal evidence has identified instances of evergreening, which can be defined as artificially extending the protection cliff, just how pervasive is such behavior? Is it simply a matter of certain bad actors, to whom everyone points repeatedly, or is the problem endemic to the industry?
This study examines all drugs on the market between 2005 and 2015, identifying and analyzing every instance in which the company added new patents or exclusivities. The results show a startling departure from the classic conceptualization of intellectual property protection for pharmaceuticals. Key results include: 1) Rather than creating new medicines, pharmaceutical companies are recycling and repurposing old ones. Every year, at least 74% of the drugs associated with new patents in the FDA’s records were not new drugs coming on the market, but existing drugs; 2) Adding new patents and exclusivities to extend the protection cliff is particularly pronounced among blockbuster drugs. Of the roughly 100 best-selling drugs, almost 80% extended their protection at least once, with almost 50% extending the protection cliff more than once; 3) Once a company starts down this road, there is a tendency to keep returning to the well. Looking at the full group, 80% of those who added protections added more than one, with some becoming serial offenders; 4) The problem is growing across time.I think the data the authors have gathered is extremely important, and I think that their study sheds important light on what happens in the pharmaceutical industry. That said, as I explain below, my takeaways from this paper are much different from theirs.
My concerns are fourfold. First, even assuming that every one of the efforts listed by the the study were an attempt to evergreen, I have no sense for whether evergreening actually happened. This study doesn't provide any data about generic entry or pricing. For example, the study describes 13 listings for OxyContin, but I'd bet dollars to donuts that there was plenty of generic oxycodone available. Similarly, many of the new listings are changes from Drug 1.0 to "new and improved!" Drug 2.0. This, of course, has been criticized as anti-competitive (since generics rely on auto-substitution laws), but the study presents no data about whether insurers refuse to pay for Drug 2.0 and instead require the generic, nor does it explain why generics can't do their own advertisements to get doctors to prescribe Drug 1.0.
Second, many of these listings and the new patents that go with them are for advances, like extended release and dissolvables. These can be critically important advances, and they are preferred by consumers. Thus, one person's "evergreening" is another person's innovation. I take extended release drugs (and expensive generic) to avoid side effects and I gave my son dissolvable Prevacid when he wouldn't stop crying with GERD (and was glad for it). Without consumer data or patent data, it is impossible to tell just how much evergreening is going on (or how harmful it is). Now, if these patents are obvious because making them dissolvable or extended is easy, I'm all for stripping protection - but that's a different issue.
Third, the article speaks of orphan drug approvals as if they are a bad thing. This made me bristle, quite frankly. My mother has an extremely rare autoimmune disease that is very painful. I often wondered, isn't there some incentive to develop drugs to treat it? Turns out there is, and though she got no relief, apparently a bunch of other rare diseases did, and that's the whole point behind orphan drug exclusivity. Concern about this exclusivity seems misguided anyway. If it turns out that drug companies are gaming it and nobody actually needs the drug, then the the loss is not too large, because it's a small population and nobody needs the generic anyway. And if it turns out that they do need it, the Orange Book only limits labeling, and doctors are free to prescribe a generic for off-label use. Without evidence that doctors refuse to do so, there's no real evidence that Orphan exclusivity does much harm. In another personal story, my wife was prescribed a generic drug in a different formulation than the patented tablet for off-label use.
Fourth, and most generally, the article speaks of new patents as if there is no innovation. New use discoveries are important. Many of our most important drugs are not for their original uses. As far as I know, generics are not barred from finding new uses and patenting them, either, though admittedly their hands are tied for patient use. So, where the authors see evergreening, I see innovation. Maybe. Maybe it's obvious. But we can't tell that from this high level, and I'm not ready to write it all off as evergreening. It is telling that I was able to provide four personal stories about how supposed evergreening efforts benefited, would have benefited, or did not increase costs for my family or me (and thankfully none of them involved oxycodone).
With these concerns stated, I will note one area of agreement - the very narrow range of new drug discovery. It's hard to discover new drugs, and it's expensive. And the results of that show in where the innovative efforts are in this study. So, one of the key questions in my mind is not whether the drug companies are evergreening, but rather whether we are striking the right balance in incentives for brand new drug discovery versus old drug improvement. That, I think, will take a lot more study.
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