{"id":1135,"date":"2021-03-23T20:25:32","date_gmt":"2021-03-23T20:25:32","guid":{"rendered":"http:\/\/blogs.luc.edu\/ipbytes\/?p=1135"},"modified":"2024-07-13T07:37:57","modified_gmt":"2024-07-13T07:37:57","slug":"in-the-market-for-affordable-medicines","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/ipbytes\/in-the-market-for-affordable-medicines\/","title":{"rendered":"In the Market for Affordable Medicines"},"content":{"rendered":"\r\n

Patents and pandemics.\u00a0 At first, these two things might not seem too related.\u00a0 Beyond patenting useful things for a pandemic \u2013 personal protective equipment<\/a>, medicines<\/a>, etc. \u2013 what do they have to do with one another?\u00a0 Well, it turns out that the COVID-19 pandemic<\/a> has put the spotlight on how to make patented medicines affordable.<\/p>\r\n\r\n\r\n\r\n

<\/p>\r\n\r\n\r\n\r\n

Let me back up and explain.\u00a0 Drug companies want patents for their drugs because it gives them a de facto monopoly<\/a>.\u00a0 After all, no other company can make and sell that patented drug until the patent expires (usually 20 years from the date the patent application was filed, although this gets complicated with \u00a0FDA regulations<\/a>, because a company still needs FDA approval to sell).\u00a0 Because the drug company has an effective monopoly, it can charge really high prices<\/a> for its drug \u2013 at least barring any regulations that limit prices.\u00a0 We\u2019ve seen this happen over and over again<\/a>, and the prices of essential medicines are only continuing to go up<\/a>.<\/p>\r\n\r\n\r\n\r\n

After the patent expires, the drug company can no longer prevent others from making and selling that drug.\u00a0 So other drug companies start making and selling equivalent versions of the drug. These are known as generics<\/a>.\u00a0 Suddenly people have competing drug options to choose from.\u00a0 Generic drug companies want more sales, so they price their drugs cheaper<\/a> than other companies to compete for sales.\u00a0 This pattern of patents expiring, generics entering the market, and prices dropping has happened again and again<\/a>.\u00a0 Competition leads to lower prices \u2013 but this is only possible once patents have expired.<\/p>\r\n

<\/p>\r\n\r\n\r\n\r\n

The High Cost of Free Markets<\/strong><\/p>\r\n\r\n\r\n\r\n

Generic competition helps make medicines affordable after a patent has expired, but what can make medicines affordable before the patent expires?\u00a0 A pharmaceutical corporation might have a de facto monopoly for 12 or 13 years<\/a>. \u00a0That\u2019s a long time for patients to have only expensive treatments available.\u00a0 After all, even if there are multiple patented drugs within the same class of drugs, they can all be priced very high as long as there is still life on the patent(s).<\/p>\r\n\r\n\r\n\r\n

\r\n
\"\"\r\n
Photo by BP Miller on Unsplash. Licensed under the applicable terms of the Creative Commons.<\/em><\/figcaption>\r\n<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n

This is where the COVID-19 pandemic comes in.\u00a0 Given the vast scale of the pandemic, many drug companies<\/a> have been working on vaccines.\u00a0 And now, even though these vaccines are being patented<\/a>, many of the vaccine manufacturers are promising to price the vaccine affordably<\/a> (at least in the U.S., and during the pandemic).\u00a0 \u00a0The U.S. has already approved three vaccines<\/a> for emergency use, with more expected<\/a> to enter the market soon.<\/p>\r\n

<\/p>\r\n\r\n\r\n\r\n

The Visible Hand Pushing Prices Down<\/strong><\/p>\r\n\r\n\r\n\r\n

Free market economics<\/a> tells us that these COVID-19 vaccines should be priced very high.\u00a0 Demand is high, as billions of people want to be vaccinated, but supply is extremely low.\u00a0 Yet drug companies are pricing vaccines more affordably<\/a>. Why is that?<\/p>\r\n\r\n\r\n\r\n

For one thing, public pressure<\/a> is compelling drug companies to price COVID-19 vaccines lower than they normally would be.\u00a0 The pandemic has killed hundreds of thousands<\/a> of Americans and severely dented the economy.\u00a0 Collecting high profits from this pandemic would not be a good look for drug companies and could provoke the U.S. government to take more direct action to lower prices, such as granting compulsory licenses<\/a>.<\/p>\r\n\r\n\r\n\r\n

On top of that, companies’ usual excuse for high drug prices isn\u2019t present during COVID.\u00a0 Drug companies usually say that research and development (R&D) costs keep prices high.\u00a0 For years, drug companies have been saying<\/a> that patents are essential to their business models because the monopolies that come with patents help to recoup expensive R&D costs not only for marketed drugs, but also the many they investigate that are not commercially viable.\u00a0 But it seems like governments have funded most, if not all, of the COVID vaccine R&D costs<\/a>, so there might not be a legitimate reason for high-priced COVID vaccines.<\/p>\r\n\r\n\r\n\r\n

The distribution chain<\/a> of medicines is really complex in the U.S..\u00a0 There\u2019s usually not a single entity buying a medicine.\u00a0 Instead, many different private insurance providers and government health insurance programs are independently vying to negotiate drug prices.\u00a0 COVID is a unique case for the U.S., because now a single entity \u2013 the U.S. federal government \u2013 is purchasing vaccines for everyone<\/a>.\u00a0 This could play a role in the lower costs too. When there\u2019s only one buyer with massive buying power, that can help lower prices.\u00a0<\/p>\r\n

<\/p>\r\n\r\n\r\n\r\n

From Free Markets to Affordable Markets<\/strong><\/p>\r\n\r\n\r\n\r\n

What can we learn from this pandemic about making medicines affordable in the future?\u00a0 Thinking just about COVID vaccines, prices may or may not stay affordable in the U.S.\u00a0 Manufacturers made their pricing commitments for the duration of the pandemic (and some companies defining the end of the pandemic as soon as this summer<\/a>), but what about after?\u00a0 Researchers are already suggesting that COVID is likely to stay with us for years<\/a>, with some suggesting that COVID vaccines could become a yearly<\/a> thing, like the flu shot.<\/p>\r\n\r\n\r\n\r\n

One takeaway from this pandemic is about the power \u2013 and limits \u2013 of public pressure.\u00a0 Many have made a strong moral argument<\/a> for drug companies to price vaccines affordably, and it seems to be working.\u00a0 But it has taken a huge amount of effort to build this pressure just around COVID vaccines.\u00a0 It doesn\u2019t seem sustainable to do this for the hundreds of other essential and expensive medicines people need.<\/p>\r\n\r\n\r\n\r\n

It\u2019s a hard problem.\u00a0 The free market isn\u2019t going to fix this, mostly because not all medicines are in a free market. Patented medicines are insulated from competition.\u00a0 And the U.S. can\u2019t unilaterally get rid of patents.\u00a0 Due to international treaties<\/a> and subsequent free trade agreements<\/a>, there are policies the U.S. can’t change, like decreasing the length of patents below 20 years<\/a> from filing.<\/p>\r\n\r\n\r\n\r\n

The U.S. needs to better prioritize protecting public health and should intervene in the market.\u00a0 The U.S. already has several<\/a> powers<\/a> through U.S. law \u2013 powers allowed by international treaties \u2013 that could help fix the patent premium in the market.\u00a0 In addition, beyond patent laws, the US could reverse a perverse Medicare rule<\/a> barring the government from negotiating drug prices.\u00a0 This has been repeatedly proposed<\/a>, but never enacted.\u00a0 We need to take this opportunity to learn what works and what doesn\u2019t so we can make medicines affordable for all.<\/p>\r\n\r\n\r\n\r\n

Keep a look out for my next post where I\u2019ll talk about some of the powers the U.S. has to make medicines affordable!<\/p>\r\n

<\/p>\r\n\r\n\r\n\r\n

Scott Hulver<\/em>
he\/they<\/em>
Assistant Blogger<\/em>
Loyola University Chicago School of Law, J.D. 2022<\/em><\/p>\r\n","protected":false},"excerpt":{"rendered":"

Patents and pandemics.\u00a0 At first, these two things might not seem too related.\u00a0 Beyond patenting useful things for a pandemic \u2013 personal protective equipment, medicines, etc. \u2013 what do they have to do with one another?\u00a0 Well, it turns out that the COVID-19 pandemic has put the spotlight on how to make patented medicines affordable. Continue reading In the Market for Affordable Medicines<\/span><\/a><\/p>\n","protected":false},"author":23,"featured_media":1146,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[18,65,78,79,80,110,111,118,131,179,200,231,232,254,264,273,325],"class_list":["post-1135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-patents","tag-affordable-medicines","tag-compulsory-licenses","tag-covid","tag-covid-vaccines","tag-covid-19","tag-free-market","tag-free-trade-agreement","tag-generics","tag-high-drug-prices","tag-loyola","tag-monopoly","tag-patented-medicines","tag-patents","tag-public-pressure","tag-research-and-development-costs","tag-scott-hulver","tag-trips"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts\/1135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/comments?post=1135"}],"version-history":[{"count":2,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts\/1135\/revisions"}],"predecessor-version":[{"id":4293,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts\/1135\/revisions\/4293"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/media\/1146"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/media?parent=1135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/categories?post=1135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/tags?post=1135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}