Big Pharma’s Pandemic Price Hikes and Patent Abuse Underscore Urgency for Action
By Lauren Aronson
October 28, 2020
Before the COVID-19 pandemic, more than 58 million Americans struggled to afford their prescription drugs. Now, the economic impact of the health crisis continues to leave millions of American workers, families and seniors struggling just to stay afloat. Meanwhile, prescription drug prices continue to rise, making it harder and harder for American patients to afford their medications at the most challenging of moments: in the midst of America’s battle against the pandemic.
Big Pharma hiked prescription drug prices — increasing prices on at least 67 brand name drugs in July 2020 at the height of the public health crisis — while receiving billions in taxpayer funding for research and development for potential COVID-19 treatments and cures.
Brand name giant AstraZeneca, for example, hiked prices on 18 prescription drugs by as much as 6 percent this summer, after securing a $1.2 billion commitment from the government for vaccine development — even as the company reported more than $3.6 billion in operating profits.
Since 2014, prescription drug prices have risen 33 percent — or 20 times faster than the rate of inflation.
Big Pharma is able to repeatedly hike prices and reap the profits by engaging in a host of anti-competitive schemes that undermine generic and biosimilar competition.
And as the crisis of affordability grows worse and Big Pharma continues to hike prices, the stakes are rising.
A recent study from Avik Roy and Gregg Girvan of the Foundation for Research on Equal Opportunity finds ballooning spending on U.S. prescription drugs is being particularly driven by Big Pharma’s abuse of the patent system to undermine biologic and biosimilar competition.
Without action from policymakers to hold drug companies accountable, the study’s authors estimate Big Pharma’s biologic drug marketplace will cost American patients an additional $25 billion by 2029 — skyrocketing from $5 billion from 2015-2020 to $30 billion by 2029.
The report notes that despite representing less than 1 percent of U.S. prescriptions, biologic drugs account for nearly half of all drug spending over the last five years. Why? Because biologics face less competition from their generic equivalents, known as biosimilars, due to differences in how the marketplace is regulated and how Big Pharma games the system to undermine competition.
A preferred tactic employed by Big Pharma to maintain monopoly power is through “patent thickets.” By seeking a multitude of patents for marginal aspects of a biologic, brand-name drug companies are able to create a “thicket” of patents that can dramatically extend exclusivity periods — blocking cheaper alternatives from coming to market. Another way Big Pharma maintains monopoly power is through “submarining” and “evergreening,” in which a branded drug maker purposefully delays the filing and issuance of a patent in order to extend market exclusivity of a drug for as long as possible.
The FREOPP study found that a number of market-based solutions to crack down on Big Pharma’s egregious practices would increase biosimilar competition, lower prices and enhance innovation.
The report concludes that several measures — increasing competition by enabling biosimilar drugs to launch without risk of treble damages, rationalizing biosimilar interchangeability, eliminating patent trolling, reforming Medicare Parts B and D and establishing a pathway for price reductions for treatments which cannot have generic or biosimilar alternatives — would lower prices and increase innovation.
“It is long past time for Congress and federal regulators to engage in a systematic reexamination of these costly inefficiencies,” the studies’ authors rightly argue. “Affordable medicine for millions of U.S. patients hangs in the balance.”
The ability for Americans to afford their prescription drugs truly does hang in the balance. While pharmaceutical companies make life-saving treatments and cures, it does not give them the right to price-gouge hardworking families to pad their own bottom lines. Big Pharma routinely tries to justify drug price hikes by pointing to research and development, but the truth is price hikes aren’t necessarily connected to drug improvements. Big Pharma’s argument is even more tortured at a time the industry is receiving massive injections of taxpayer capital to fund R&D.
Big Pharma engaged in price hikes during a pandemic and the industry’s anti-competitive tactics are raising the stakes for millions of Americans even higher.
Policymakers must hold Big Pharma accountable with market-based solutions to curb patent abuse, crack down on shady anti-competitive tactics, stop unfettered price hikes and increase transparency in order to lower prescription drug prices.
At the same time, Washington must reject red herring proposals from Big Pharma like the Rebate Rule that would only serve to increase premiums, incur dramatic costs on taxpayers and line the pockets of brand-name drug companies with a more than $100 billion bailout.
Members of Big Pharma showed the American people their true character with their pandemic price hikes. The time is now to hold them accountable.
Lauren Aronson is the executive director of The Campaign for Sustainable Rx Pricing.