Why do drug prices remain so high?

A new study by Professor Robin Feldman examines all drugs on the market between 2005 and 2015, identifying and analyzing every instance in which the company added new patents or exclusivities.

“Why do drug prices remain so high?” asks Feldman in May Your Drug Price Be Ever Green. “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?”

The results, she finds, show a startling departure from the classic conceptualization of intellectual property protection for pharmaceuticals. “The results show definitively that misuse of the patent and regulatory systems is not limited to a few pharma bad apples,” says Feldman. “It is business as usual throughout the industry.” In addition, says Feldman, “blockbuster drugs have earned billions of dollars for pharma, and abusing the patent system has paved the way.”

The study also reveals data pertinent to the discussion of opioid addiction. “As the nation awaits release of the final report from the White House Opioid Commission,” notes Feldman, “the pharmaceutical industry continues to be under fire for opioids and more. Many are hoping the White House report will help ease access to medicines that treat opioids. Reckitt, which makes the brand name drug Suboxone, is a serial offender when it comes to manipulating the systems. Our data set shows that Suboxone extended its protection cliff 8 times, including obtaining an orphan drug designation, which is intended for drugs that serve only a small number of patients.”

Key results include the following:

• 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 were not new drugs coming on the market, but existing drugs.
• Adding new patents and exclusivities to extend the protection cliff is particularly pronounced among blockbuster drugs. Of the roughly 100 best-selling drugs, more than 70% had their protection extended at least once, with more than 50% having the protection cliff extended more than once.
• 40% of all drugs available on the market created additional market barriers by adding patents or exclusivities.
• Once a company starts down this road, there is a tendency to keep returning to the well. Almost 80% of drugs that added protections added more than one.
• Among those adding more than one barrier, some were serial offenders, with roughly half adding 4 or more protections and some adding more than 20.
• The problem is growing across time. The number of drugs that extended their protection doubled during the time period. The addition of certain types of barriers increased at an even greater rate, with some tripling.

In addition to the aggregate results, the data set will provide a treasure trove for researchers and government officials by showing all the protections added for each drug individually during the period. For example, with Oxycontin, the company extended its protection cliff 13 times, piling on new patents and exclusivities over and over again.

The paper offers strategies to help fix the problems:

• A “one-and-done,” approach in which each drug receives one – and only one – period of exclusivity
• Ruthless simplification
• Transparency

Professor Feldman is the Director of the Institute for Innovation Law at the University of California Hastings College of the Law in San Francisco and author most recently of Drug Wars: How Big Pharma Raises Prices and Keeps Generics off the Market (Cambridge University Press 2017).

*This story was updated with new results at 12:04 p.m. on Dec. 12, 2018.