Patent Drugs and Healthcare

Cass, Clarissa, Charlene, Hui Fen

Patent Drugs
Patent

The right to ownership, whereby a person / organization discovers a lesser known concept or invents something new and holds sole intellectual ownership rights to that particular idea.

Pharmaceutical Patents:

protect manufacturers of prescription drugs, prohibiting others from producing a drug during the length of its patent protection length: 15-20 years (US: 20)

Background of the Pharmaceutical Industry

Develops produces and markets drugs licensed for use as medication. Subject to variety of laws and regulations surrounding patents, testing and safety of drugs. However, ultimately, they are profit making companies. (in other words, they are commercialized) Multi million dollar industry In 2006, global spending on drugs topped US$643billion Pharmaceutical industry is the most profitable industry in USA, with returns of 17%. Top names include Abbott, Pfizer and GlaxoSmithKline.

Commercialisation of the Pharmaceutical Industry

Commercialization o Money first, not patients. Unique nature of drugs- they are essential for health. o Companies can afford to price their drugs at significantly higher prices. Prices are artificially high. o The poor have no access to affordable drugs. Drug companies also link up with doctors to promote their drugs in an effort to sell more drugs. o Doctors get an incentive to prescribe drugs from said company. Over prescription of drugs when not necessary.

Commercialization of the Pharmaceutical Industry

Firms tend to fund research into modification of exiting drugs , instead of innovataion of new low-cost drugs E.g. Abbott Labs produced a supposedly supposed drug Zemplar as they were about to lose a patent for Calcijex. However, FDA reported that the differences between these drugs were not enough to prove its superiority o Cost of modifying/imitating existing drugs cost less than developing new drugs (R&D) o "New" drugs are priced even higher than original, rendering them unaffordable by the poor o Potentially life-saving drugs are not produced due to the low profit in 2004, John Hopkins researchers discovered that an off-theshelf compound could arrest liver cancer growth in rats, and would only cost 70 cents a day, but no pharmaceutical company showed interest in developing it for human use

Commercialization of Pharmaceutical Industry

Drug research motivated by potential profits, rather than provision of accessible healthcare for all o Results that do not favour firm's product are not published o Industry-supported research favours company's product over generic products, even if latter is more effective, safer, or cheaper o Patients pay unnecessarily exorbitant prices for drugs when there are potential cheaper, equally effective alternatives

Advantages of Pharmaceutical Patents

Prospect of earning huge profits provides incentive for pharmaceutical companies to invest large amounts of resources into scientific research to develop new drugs.

Initial investment in pharmaceutical research amd development (R&D) is costly --> strong patent protection is an important step to provide the opportunity to recoup investments and make good profits According to the 2006 Economic Report of the US President, Intellectual property protection helps create an incentive structure that encourages research and development, which in turn leads to increased innovation. Increased innovation generates greater rates of economic growth.

Disadvantages of Pharmaceutical Patents

Patents results in high prices.

Those in need of the drug may not get it as it is too costly for them to afford
o Companies producing patented drug are likely to set high prices to make profits

Companies do not like to produce cheap effective and safe drugs because it does not bring high profits
o In 2004 for example Johns Hopkins researchers discovered that an off-theshelf compound could arrest liver cancer growth in rats. It would cost 70 cents a day, but no drug company showed interest in developing the drug for human use.

Healthcare Insurance

A form of risk management primarily used to hedge against the risk of a contingent, uncertain loss
- pools resources of a large group to pay for losses of a small group - needs a large base number of members

Is it justified for big insurance companies to deny individuals insurance or demand hefty premiums based on an individuals background history?

Healthcare Insurance Companies

Medical check-up before application Pre-existing medical conditions: deny insurance, exclude

certain sections or charge higher premiums

Prevent "free-ridership"
Drives up cost for everyone Collapse of the system

Insurance companies ultimately profit-making companies

Human Rights
Health care as a basic right

View of human life as "sacred"

Not merely to those who can afford it 12.6 million non-elderly adults (36 %) discriminated against in

the past three years: ineligible for coverage because of a preexisting condition, charged them a higher premium, or refused to cover their condition
37 million Americans carry no health insurance

Unethical gaming by insurance companies

Insurers game the system in unethical ways by going

beyond preventing free ridership Make use of technicalities to avoid payouts Blue cross of California - asks physicians to look out for conditions to cancel new patients medical coverage

US Health Reform
Individual mandate

2014 onwards, people with pre existing

medical conditions cannot be turned down for health insurance coverage, charged a higher premium or sold a policy that limits health services because of a pre-existing condition

Conclusion
While it may not be fully justified, it is the only

possible way for insurance to work Regulations to prevent insurance companies from using technicalities to game the system

References

http://www.bbc.co.uk/news/business-16913816 http://www.nytimes.com/2012/03/07/business/global/indias-supreme-court-to-hearlong-simmering-dispute-on-drug-patents.html?pagewanted=all http://www.innovation.org/documents/File/Pharmaceutical_Patents.pdf http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/rl3075601102005. pdf http://dinorcia.net/pdfs/DiNorciaCommercializationUSPharmaceuticalBusiness2011W d.pdf http://www.youtube.com/watch?v=bmqB7JzZePQ&feature=BFa&list=PL99815CB46F8 CDC23