Responding to my post below on patents and prescription drug prices, Allen Glosson of St. Louis, Missouri, writes:
Back in 1996, Congress lengthened the patents from 17 years to 20 years, so what you propose has already been done. The practical effect, however, won’t be seen until about 2009 when the first drugs patented under the new time duration actually hit the market.I've had some thoughts before on how to address the tricky issue of patents and prices. First, the patent clock should start ticking with FDA approval, not with the start of the approval process. Second, a two-tiered patent should be established that expires in X years, or in X-plus years if the drug maker agrees to limit profits off that drug to a reasonable percentage during that time. I'm not an economist and not an expert in drug industry economics, but it seems to me it would give pharmaceutical makers assurances of having enough time to recoup their massive R&D costs before facing low-cost generics - and prices would fall over time.
It takes about 15 years for the entire drug approval cycle to be completed, previously leaving only 2 years for the drug company to recover all of its R&D costs. It’s no wonder many of the drug companies tried to buy off generic manufacturers to effectively lengthen their protection and allow more time for R&D cost recovery. For what it's worth, the FDA claims that it cut the approval time in half, but the time they are talking about is their approval process after the company has submitted all of the required studies, etc. That time was cut from about 24 months down to about 12 months. In the meantime, however, more drugs now require Phase III trials, actually lengthening the process.
Quick analysis: Suppose $500M in R&D costs and 15 of 17 years for approval. That leaves 2 years for recovery. Consider 1M prescriptions each year and you have $250 per prescription. Now, lengthen the time to 20 years, again with 1M prescriptions each year. Suddenly, the cost per prescription drops to $100. In reality, it’s not quite that simple, but those are reasonable guesses.
Frankly, what I would propose is that a drug be given phased approval after each stage of clinical trials. This would allow the company to sell its drug to a limited market earlier. The available market would expand after the successful completion of each phase in the trials. Currently, the drug can’t be sold to anybody until after the FDA finally approves it. If you’ve ever read the writing of cancer patients, slowly dying, desperate for that new drug begging with the drug company and the FDA to allow them one more shot at life, you’ll know that the FDA process is deeply flawed.