[Pharm-policy] McGinley in WSJ on new drug patent study

[James Love]

July 24, 2000
WSJ

Drug-Patent Laws Are Questioned
In a Report by Nonprofit Group
By LAURIE MCGINLEY
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- Patent protection for drugs has increased substantially
over the past two decades, resulting in hefty increases in industry
profits and consumer drug bills, but not necessarily in innovation, says
a new report by a nonprofit group.

Because of federal intellectual-property-protection laws adopted over
the past two decades, new brand-name drugs now have effective patent
lives of about 13 to 15 years, compared with eight years for drugs
approved in the early 1980s, says the report by the National Institute
for Health Care Management. As a result, the laws have significantly
delayed the entry of some cheaper generic drugs into the market, the
report said.

Effective patent lives are the parts of patent terms remaining after
drugs are approved by the Food and Drug Administration.

The organization that prepared the report, a health-care research group
based here, is funded by foundations, the government and managed-care
companies. The managed-care industry has complained about financial
strains
caused by rising costs of medications. 

The report, to be released Monday, also found that, over the past
decade, only 36% of new-drug applications approved by the FDA were for
compounds never sold on the U.S. market. The rest were for drugs whose
active ingredients already were on the market, to be marketed in new
dosages and combinations, or by new manufacturers.

   [snip]

Pharmaceutical Research and Manufacturers of America, the main industry
trade group, sharply criticized the report. Referring to the fact that
the nonprofit group gets some funding from managed-care companies, the
group's president, Alan Holmer, said: "The sponsors' self-serving agenda
is to reduce patent terms for medicines to save money for themselves."

Mr. Holmer called the report "inaccurate and misleading," saying that
the average patent term for drugs is about 11 years, far less than the
18 years for most products. "Pharmaceutical companies have far less time
than other industries to recoup their huge research and development
costs," he
said.

   [snip]


The report examined six laws enacted between 1983 and 1997 that
strengthened the patents of brand-name drugs, extended their exclusivity
on the market or eased the transfer of government discoveries to
pharmaceutical companies.  Brand-name drugs account for about 90% of
total spending and about three-fifths of prescriptions in the U.S.
market.

The laws also have helped the industry maintain its position as the most
profitable in the nation. "These laws have been a key driver in the
industry's profits," Ms. Chockley said.

The industry, however, faces challenges. According to Mr. Holmer, 150
drugs with $50 billion in combined annual sales will lose patent
protection over the next five years. That development will offer "even
greater choice to consumers," he said, as generics come on the market.
The report notes that
many manufacturers are seeking to extend their patents. 

Write to Laurie McGinley at laurie.mcginley@wsj.com



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James Love, Director           | http://www.cptech.org
Consumer Project on Technology | mailto:love@cptech.org 
P.O. Box 19367                 | voice: 1.202.387.8030
Washington, DC 20036           | fax:   1.202.234.5176
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