How Big Pharma Is Wrecking the Inflation Reduction Act

[Celerity]

The industry’s intellectual property manipulations are stealing from your pockets—and limiting the benefits of the Biden administration’s key achievement.

https://newrepublic.com/article/189450/big-pharma-patent-ira-billions

https://archive.ph/44hAe


North Carolina Senator Thom Tillis and Delaware Senator Chris Coons are two of the pharmaceutical industry’s go-to lawmakers.

It was a dose of qualified good news. Signed in 2022, Joe Biden’s Inflation Reduction Act gave the Centers for Medicare and Medicaid Services a power they’d sorely lacked since the agency’s conception: the ability to negotiate drug prices directly with the manufacturers. The law was by no means perfect. The cost savings are only for 10, albeit very expensive, drugs, and the negotiated prices only apply to Medicare and Medicaid rather than extending to every health care insurance plan. Despite these limitations, estimates predict that price negotiations will save the government around $6 billion every year and send a clear signal to the pharma companies that the government was going to have a stronger hand in dictating prices. Here’s the bad news: The $6 billion the government is supposed to save from drug price negotiations is very close to the amount Medicare has already lost thanks to Big Pharma’s abuse of the patent system.

Earlier this month, the consumer watchdog Public Citizen released a report outlining how four of the 10 drugs subject to negotiation would have faced competition from less expensive generic brands before price negotiations went into effect were it not for tactics perpetrated by the pharmaceutical industry known as “evergreening.” Put simply, evergreening is when a pharma company patents minor modifications on the drug as “new inventions” and then uses the new patents to extend their monopoly, freezing out competition and artificially keeping prices high. As a result, the report estimated Medicare will lose between $4.9 and $5.4 billion in savings that should have accrued had the medications come off patent earlier. The problem for many generic drug companies is that most medicines have multiple patents—which means there are many avenues for this kind of abuse.

Take, for example, one of the four drugs mentioned in the report, Enbrel. Sold by the pharma company Amgen, the medication is used to treat severe rheumatoid arthritis. In 2023 alone, the drug generated $3.7 billion in revenue. A separate report from Public Citizen revealed that Medicare could have saved over $1 billion in less than four years on Enbrel if generic competition had been allowed to enter the market in 2019 when the underlying patent was set to expire. Amgen filed three times as many patent applications for Enbrel in the U.S. compared to Japan and Europe, and 72 percent of all patent applications were filed after the drug received approval in 1998. Amgen has filed a total of 57 patent applications on Enbrel in the U.S. with the aim of extending its monopoly by 39 years. Enbrel’s patents are now due to expire in the U.S. in November 2028. In Europe they expired in 2015.

Big Pharma has many excuses to defend its abuse of the patent system. In fairness to pharma companies, it can take a long time from when the first patent is filed to when the drug goes through all the necessary clinical trials and makes it to market. By the time the first dose is sold, about half the life span of the patent has expired, leaving the pharma companies relatively little time to recoup the research and development costs. Pharma companies argue that along the way they develop legitimate new ways of administering or dosing the drug, and that these new inventions warrant new patents. This is all fair and good until you compare how many patents pharma companies file in the U.S. for a single drug compared to Europe.

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