Patent Extension Law Boosts Industry’s Profits
A 1997 law intended to promote pediatric testing of pharmaceuticals has had the "unintended consequence" of allowing several drug companies to reap big rewards through patent extensions, the Wall Street Journal reports. Under the law, a company can gain a six-month patent extension for a drug if it agrees to conduct formal studies of that drug's effects on children. The Journal reports that the extra six months of market exclusivity can bring a pharmaceutical company millions of dollars of additional revenue, while testing a drug only costs "anywhere from $200,000 to $3 million" According to former FDA Commissioner David Kessler, the law was enacted after previous efforts to coax the industry into conducting more pediatric clinical trials proved ineffective. The FDA and many pediatricians say that the law has led to the development of important new data about medications for children, and the Journal reports that labels on 14 drugs have been changed to reflect the new dosing, safety and formulation information that has resulted from testing on children. About 200 more proposals to conduct children's testing are pending at the FDA.
The Journal reports that some critis contend that the law has increased drug makers' bottom line with little benefit to children and at the expense of public health. The following are some complaints about the law:
- Generic Drugs: The extra six months of market exclusivity means a delay in the arrival of generic versions of drugs, resulting in higher drug prices for patients. The FDA estimates that the law "will raise the cost of prescription drugs $695 million a year." Generic drug makers stand to lose $10.7 billion in sales over the next two decades, and retail pharmacies, which charge a higher markup for generic drugs, could lose $4.9 billion in the same period.
- Irrelevant Testing: Critics argue that the law encourages drug companies to conduct testing on medications that treat ailments not common in children. For instance, Bristol-Myers and Merck have earned patent extensions for drugs that treat adult-onset diabetes and hypertension, respectively, which are both rare in children.
- Narrow incentive: Another argument against the law is that it encourages pharmaceutical companies to conduct children's testing only on top-selling drugs on the verge of patent expiration, while ignoring off-patent and low-selling drugs that could potentially benefit children.
The patent extension law comes up for reauthorization at the end of the year. The Journal reports that the FDA is trying to do more to encourage drug makers to conduct testing on children; it recently promulgated a rule requiring companies to conduct pediatric testing on "not-yet approved" drugs "that might benefit children." Under the rule, a company would be rewarded with a six-month patent extension if it conducted such testing, while the FDA could go to "court to force testing" if a company refused (Zimmerman, Wall Street Journal, 2/5).
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