NCPA - National Center for Policy Analysis

Clocks Tick on Drug Patents

October 23, 2002

Allowing more generic drugs on the market is seen as a way of lowering prescription drug prices. But strong patents are not the cause of rising drug cost, experts point out. In fact, while the prices of prescription drugs have been rising, patents have only been growing weaker.

Various roadblocks in the system have reduced the length of time a branded drug maker is protected by patent law.

  • The Hatch-Waxman law, passed in 1984, allowed generic manufacturers to tinker with branded drugs from day one, so they could be ready to produce knock-offs as soon as patents expired -- and allowed them to bypass clinical trials so long as they could prove their products were chemically similar to the original.
  • In return, branded companies were compensated for part of the patent time they lost as drugs wound through clinical trials -- but that compensation could not exceed five years.
  • But as clinical trials have stretched longer, more drug companies are exceeding that five-year cap -- meaning that many new drugs make it to the market with an average of only 11 years of effective patent protection left, if that.
  • The Food and Drug Administration has effectively shortened patent protection by asking drug companies to double the size of Phase III trials, and it increasingly demands more preclinical data showing that new drugs were run against different laboratory screens for safety before being tried on patients -- even as the clock continues to tick.

Few generic companies develop new drugs. But branded companies plow profits back into research on new medicines. So cutting patent times further will eventually crimp research budgets.

Source: Scott Gottlieb (American Enterprise Institute), "Patent Mistakes," Wall Street Journal, October 23, 2002.

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