May Your Drug Price Be Ever Green

93 Pages Posted: 31 Oct 2017 Last revised: 13 Jun 2018

Robin Feldman

University of California Hastings College of the Law

Date Written: October 29, 2017

Abstract

Why do drug prices remain so high? 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?

This study examines all drugs on the market between 2005 and 2015, identifying and analyzing every instance in which the company added new patents or exclusivities. The results show a startling departure from the classic conceptualization of intellectual property protection for pharmaceuticals. Key results include: 1) Rather than creating new medicines, pharmaceutical companies are recycling and repurposing old ones. On average, 78% of the drugs associated with new patents in the FDA’s records were not new drugs coming on the market, but existing drugs; 2) Adding new patents and exclusivities to extend the protection cliff is particularly pronounced among blockbuster drugs. Of the roughly 100 best-selling drugs, almost 80% extended their protection at least once, with almost 50% extending the protection cliff more than once; 3) Once a company starts down this road, there is a tendency to keep returning to the well. Looking at the full group, 80% of those who added protections added more than one, with some becoming serial offenders; 4) The problem is growing across time.

Keywords: Patent, Patents, Intellectual Property, Pharmaceuticals, Pharma, Generics, Competition, Drug, Drugs, Exclusivities, FDA

JEL Classification: K2

Suggested Citation

Feldman, Robin, May Your Drug Price Be Ever Green (October 29, 2017). UC Hastings Research Paper No. 256. Available at SSRN: https://ssrn.com/abstract=3061567 or http://dx.doi.org/10.2139/ssrn.3061567

Robin Feldman (Contact Author)

University of California Hastings College of the Law ( email )

200 McAllister Street
San Francisco, CA 94102
United States

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