New study finds that extended price protections on drugs do not spur innovation

As Congressional committees work to meld the House and Senate versions of the health bill and Republicans launch a last-minute effort to scuttle the entire enterprise, one unsavory element of the legislation seems to have escaped much public attention. That’s the provision permitting developers of biomedical drugs (known as biologics) an additional 12 years of protection from generic competition, despite the fact that a similar price protection measure in Europe did not spur innovation or benefit patients in any way.

Currently, federal law allows makers of all drugs (including biologics) to extend their patent protection for an additional five years after their patents expire. By allowing generic manufacturers to develop and sell generics after five years, this time limit saves American consumers roughly $10 billion a year, according to a recent column in The Los Angeles Times.

But last summer, an amendment was inserted into the House and Senate versions of the health care reform bill that provides the makers of biologic drugs up to 12 years of patient protection (an extra three years every time they tweak the drug formula slightly). One of the legislators who sponsored the amendment, Anna Eshoo (whose Palo Alto district is home to lots of venture capitalists), says the additional protection is necessary to encourage biotechs to pursue new innovative drugs. (Eshoo, by the way, is the top recipient of the biotech industry’s campaign donations to Congress, according to LA Times columnist Michael Hiltzik.)

However, a new study in current Journal of Health Politics, Policy and Law finds that a similar 10-year measure extending price protections for drugs developed in Europe did not spur innovation in drug development there. The main effect of the European extension on drug price protections was to raise prices and drug company profits, according to one of the study’s co-authors, Don Light, a visiting professor at Stanford University. Light’s study also spotlights how the European Parliament, under pressure from pharmaceutical lobbyists, rushed the measure through before less affluent countries from Easter Europe could join the European Union (in 2004) and oppose the price protections.

As Light notes, “most affected are developing countries, where [price protections] makes drugs for cancer, AIDS and other serious conditions prohibitively expensive.”

What’s that French saying? Plus ca change, moins ca change. The more things change, the more they stay unchanged. How apt!

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3 Responses to New study finds that extended price protections on drugs do not spur innovation

  1. Michael Kirsch, M.D. says:

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