http://www.forbes.com/2002/05/02/0502patents.html
Solving The Drug Patent Problem:by Matthew Herper
Drug companies may be suffering from a research slump but their problems run deeper–to the U.S. intellectual property laws on which they rely for their heavy profits. Fortunately, there is a solution which we presented a year ago: Give a new drug’s inventor the exclusive right to sell the drug for 15 years after the day the drug is approved by regulators. (See: Perennial Patents.)
Our Solution: Give drug patents a shorter term of 15 years but don’t start the clock until the FDA approves the drug.
Sounds simple. But it is very different from the way the system currently works. Now, patents protect drugs from copycat versions for 20 years after the drug is invented. This is a bitter pill for pharmaceutical companies because it can take eight years or more after invention to accumulate enough data to get a drug past the U.S. Food and Drug Administration. Once the patent expires, 80% of the brand name sales can vanish within a year as generic competitors reach the market.
Worse, the current system becomes complicated as drug companies file patent upon patent to try to extend the life of a single drug–turning to litigation to try to stifle generics. Big pharma’s biggest loophole: When a generic drug is challenged in court, the FDA is forced by law to freeze its approval for 30 months unless the case is settled before that. As a result, generic companies are constantly suing to invalidate extra patents and brand name drugmakers sue to keep generic versions off the market.
Such patent shenanigans slow medical innovation. The knowledge that current drugs will go off patent should in theory help spur big pharmaceutical companies to license or develop new and better drugs. In theory, we pay more for branded drugs to finance the massive research needed to develop them. But long battles over dozens of patents can simply distract pharmaceutical companies from their job: making new medicines.
Look at Bristol-Myers Squibb . The company used court cases to delay generic versions of cancer drug Taxol and BuSpar. Generic Taxol was delayed for years. Keeping the copycats off the market made Bristol hundreds of millions of dollars and hurt generic drugmakers like Ivax and Watson Pharmaceuticals . But while this was going on, Bristol spent $2 billion on a cancer drug from ImClone that wound up being delayed, watched the prospects for hypertension drug Vanlev sink on new clinical data, stuffed its inventory channels and saw generics eat away at its market share for many top drugs.
The result: Despite its vigorous defense of its patents, Bristol-Myers had to cut its earnings estimates for 2002 in half. Other drugmakers may fare better than Bristol– AstraZeneca has a nice pipeline even if it does lose its case against Andrx and other generic drugmakers over Prilosec, its top-selling acid reflux drug. But all the energy and money spent defending Prilosec could be turned back into research.
Both drugmakers and the public would be better served if Astra had been given exactly 15 years from the drug’s approval to sell it and then the generic drugmakers would be allowed to swoop in on cue. There would be no long expensive trial over when Andrx would get to sell generic Prilosec. A 15-year rule would remove uncertainty from both the generic and branded drug businesses and put the focus on science, where it belongs.
Lately, there have been signs that the U.S. Federal Trade Commission might crack down on the patent games drug giants play. Last week, Biovail acknowledged that it had been warned that some of the patents it filed on key drugs were illegal. But the FTC’s crackdown won’t keep this mire from thickening. Simply cutting down on the number of extra patents doesn’t go far enough.
Drugs like Claritin, developed by Schering-Plough , can take years to get through research trials or make it past regulators. Current law encourages pharmaceutical companies to do their clinical trials as quickly as they can and still satisfy the FDA. So change it–and let generic drugmakers and branded pharmaceutical companies mark the day, 15 years after a drug is approved, that its exclusivity expires. If that won’t spur medical innovation, nothing will.
Solving The Drug Patent Problem:by Matthew Herper
Drug companies may be suffering from a research slump but their problems run deeper–to the U.S. intellectual property laws on which they rely for their heavy profits. Fortunately, there is a solution which we presented a year ago: Give a new drug’s inventor the exclusive right to sell the drug for 15 years after the day the drug is approved by regulators. (See: Perennial Patents.)
Our Solution: Give drug patents a shorter term of 15 years but don’t start the clock until the FDA approves the drug.
Sounds simple. But it is very different from the way the system currently works. Now, patents protect drugs from copycat versions for 20 years after the drug is invented. This is a bitter pill for pharmaceutical companies because it can take eight years or more after invention to accumulate enough data to get a drug past the U.S. Food and Drug Administration. Once the patent expires, 80% of the brand name sales can vanish within a year as generic competitors reach the market.
Worse, the current system becomes complicated as drug companies file patent upon patent to try to extend the life of a single drug–turning to litigation to try to stifle generics. Big pharma’s biggest loophole: When a generic drug is challenged in court, the FDA is forced by law to freeze its approval for 30 months unless the case is settled before that. As a result, generic companies are constantly suing to invalidate extra patents and brand name drugmakers sue to keep generic versions off the market.
Such patent shenanigans slow medical innovation. The knowledge that current drugs will go off patent should in theory help spur big pharmaceutical companies to license or develop new and better drugs. In theory, we pay more for branded drugs to finance the massive research needed to develop them. But long battles over dozens of patents can simply distract pharmaceutical companies from their job: making new medicines.
Look at Bristol-Myers Squibb . The company used court cases to delay generic versions of cancer drug Taxol and BuSpar. Generic Taxol was delayed for years. Keeping the copycats off the market made Bristol hundreds of millions of dollars and hurt generic drugmakers like Ivax and Watson Pharmaceuticals . But while this was going on, Bristol spent $2 billion on a cancer drug from ImClone that wound up being delayed, watched the prospects for hypertension drug Vanlev sink on new clinical data, stuffed its inventory channels and saw generics eat away at its market share for many top drugs.
The result: Despite its vigorous defense of its patents, Bristol-Myers had to cut its earnings estimates for 2002 in half. Other drugmakers may fare better than Bristol– AstraZeneca has a nice pipeline even if it does lose its case against Andrx and other generic drugmakers over Prilosec, its top-selling acid reflux drug. But all the energy and money spent defending Prilosec could be turned back into research.
Both drugmakers and the public would be better served if Astra had been given exactly 15 years from the drug’s approval to sell it and then the generic drugmakers would be allowed to swoop in on cue. There would be no long expensive trial over when Andrx would get to sell generic Prilosec. A 15-year rule would remove uncertainty from both the generic and branded drug businesses and put the focus on science, where it belongs.
Lately, there have been signs that the U.S. Federal Trade Commission might crack down on the patent games drug giants play. Last week, Biovail acknowledged that it had been warned that some of the patents it filed on key drugs were illegal. But the FTC’s crackdown won’t keep this mire from thickening. Simply cutting down on the number of extra patents doesn’t go far enough.
Drugs like Claritin, developed by Schering-Plough , can take years to get through research trials or make it past regulators. Current law encourages pharmaceutical companies to do their clinical trials as quickly as they can and still satisfy the FDA. So change it–and let generic drugmakers and branded pharmaceutical companies mark the day, 15 years after a drug is approved, that its exclusivity expires. If that won’t spur medical innovation, nothing will.
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