Pharma’s Secret Weapon To Keep Drug Prices High

Skyrocketing drug prices are forcing states to take unprecedented measures to rein in health care spending. Vermont just became thenation’s first state to require prescription drug pricing transparency. The New York and Massachusetts attorneys general have launched investigations into major pharmaceutical companies’ and insurers’ drug pricing policies and strategies.

These are important steps. But they ignore a key driver of the problem: secondary patents. Familiar to only a few people inside the insular world of intellectual property law, secondary patents work like this: Companies file for additional, defensive patents to thicken the protection around their original base patents. These additional patents rarely represent anything new in terms of science. Instead, their purpose is to prolong a company’s monopoly and, along with that, its ability to charge high prices for its drugs. Some drugs have dozens of secondary patents. Abbott Labs, for example, has over 108 patents on its HIV drug Kaletra.

Take the case of Sovaldi, a treatment for hepatitis C developed by Gilead Sciences. In the United States, Gilead prices Sovaldi at up to $1,000 a pill, or about $84,000 for a complete course of treatment. This pricing strategy helped Gilead clear $18 billion in profits last year, while taxpayer-funded Medicaid programs, state health programs, and patients have trouble affording this astronomically priced drug.

Sovaldi is comprised of a base compound — sofosbuvir — for which the pharma giant has filed three patents. On top of that, Gilead has pursued an additional 24 patents, with more likely to come.

My organization, the Initiative for Medicines, Access & Knowledge (I-MAK), aims to ensure that people with hepatitis C and HIV around the world get the medicines they need to survive and lead healthy lives. We have evaluated Gilead’s patent portfolio and found that, based on US and international patent law, Gilead does not deserve any of its 27 patents for Sovaldi. Both the base and secondary patents for the drug are based on old science and commonly known techniques. Yet because of its defensive patenting strategy, Gilead will maintain an iron lock on its market share and charge exorbitantly high prices to Americans with hepatitis C until well into the 2030s.

Harvoni, another medication that treats hepatitis C, combines sofosbuvir and a drug called ledipasvir. Currently, Harvoni has 27 secondary patents. If these were removed, people in the US could access far cheaper versions of the same drug as soon as 10 years earlier. Based on I-MAK’s conservative estimates, this could open access to treatment for millions of people in the US, saving patients and payers like Medicare and Medicaid $5 billion over an eight-year period. In the US, Harvoni is priced at $94,000 for a course of treatment. In middle-income, high-population countries like Argentina, Brazil, and China, people are forced to pay thousands of dollars for sofosbuvir. Stripping away unmerited patents would reduce drug costs and increase access for millions of people in the US and around the world.

Pharmaceutical companies love to claim that winnowing their armada of patents would be a disincentive to innovation and would limit research into new drugs. Don’t believe it. The industry devotes shockingly little funding to research and development. Companies spend roughly one-third of their revenues onmarketing and only half as much on research and development, while spending big on armies of lawyers to devise and defend secondary patents and other so-called “life cycle management” strategies. Drug research funding has beendeclining for more than a decade, while strategies of secondary patenting have steadily increased.

We support patents — just not those that are unmerited and that unjustly prolong companies’ market power and prevent legitimate competition.

It’s time to reevaluate and modernize the current standards for awarding all patents, but especially secondary patents. In the 10 years since we founded I-MAK, we have won multiple cases challenging secondary and other unmerited patents. This has helped government health programs and patients around the world access cheaper medicines and live better. As a result of public-interest intervention, China, Ukraine, and Egypt have already knocked down secondary patents for Sovaldi.

By ensuring that patents are fairly awarded, governments can ensure that medicines are affordable and available to those who need them. This is especially important in the US, which is the only OPEC nation with no government regulations on drug pricing.

Our patent system should reward only true inventions in science and medicine. In the face of public health epidemics and out-of-control drug pricing, we need a patent system that achieves a better balance between the interests of corporations and the public.

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