On Monday, India’s Supreme Court rejected a patent application by pharmaceutical giant Novartis for Veenat, a generic version of the company’s top-selling cancer treatment drug Gleevec. As the New York Times reports, public health advocates cheered the decision as a major victory for the country’s low-income population, as continued access to the affordable generic could save millions of lives. But the underlying differences in how intellectual patents function in India versus the U.S. also reveals a major source of Americans’ inflated prescription drug costs.
India, which exports $10 billion worth of generic medications every year, didn’t pass a robust intellectual property patent law until 2005. This law allowed for patents on medications discovered after 1995. At first glance, that would appear to qualify Novartis to pursue a patent on Veenat. But as the Times explains, the Indian justices concluded that an older, patented Gleevec version was too similar to the post-1995 version to qualify the later iteration as a “new” drug — a heightened standard of scrutiny that the U.S. does not share:
In 1993, Novartis patented a version of Gleevec that it later abandoned in development, but the Indian judges ruled that the early and later versions were not different enough for the later one to merit a separate patent. […]
Anand Grover, a lawyer who argued the case on behalf of Cancer Patients Aid Association in India, said the ruling had a sweeping effect since it confirmed that India has a very high bar for approving patents on medicines.
“What is happening in the United States is that a lot of money is being wasted on new forms of old drugs,” Mr. Grover said. Because of Monday’s ruling, “that will not happen in India.”
Indeed, the vast majority of drug patents given in the United States are for tiny changes that often provide patients few meaningful benefits but allow drug companies to continue charging high prices for years beyond the original patent life.
In a classic example, AstraZeneca extended for years its franchise around the huge-selling heartburn pill, Prilosec, by performing a bit of chemical wizardry and renaming the medicine Nexium. Amgen has won so many patents on its hugely expensive erythropoietin-stimulating drugs that the company has maintained exclusive sales rights for 24 years, double the usual period.
This culture of Big Pharma companies reauthorizing U.S. drug patents by instituting negligible changes to the “inactive ingredients” in their products perpetuates high costs for both the American people and public insurance plans that must subsidize the price of expensive, brand name drugs. Pharmaceutical companies’ ability to extend their intellectual property protection (IPP) is a consequence of a series of laws that were passed beginning in the 1980s. While these laws were meant to encourage drug innovation, they have also had the adverse effect of extending patents on certain drugs’ active ingredients to as many as 20 years, as this data compiled in a National Institute for Health Care Management (NIHCM) Foundation report shows:
The report also finds that 60 percent of new drug applications that were approved by the U.S. Food and Drug Administration (FDA) in the 1990s were for drugs that contained active ingredients that already had an existing patent, thus delaying the release of generic drug versions for those ingredients by another decade or more.
This is not to claim that issues surrounding U.S. drug patent policies are cut-and-dry. America provides a massive amount of research and development funding that makes the creation of some of these drugs possible in the first place — and manufacturers often derive this funding by making their drugs costly. However, since poorer nations like India balk at developing more relaxed patenting standards that would raise their poverty-stricken population’s health care costs, Americans are often left to pick up the tab. And that status quo is exacerbated further by shoddy “pay for delay” arrangements between U.S. brand name and generic drug makers that can delay a generic drug’s release into market even more.
The NIHCM study even confronts this problem, acknowledging that pharmaceutical companies’ “costs must be covered by the rare ‘blockbuster’ drug that emerges from a wide portfolio of projects” and that making “incremental improvements to a blockbuster and obtaining additional patent life or market exclusivity protection is a relatively safe way to maximize profits.” However, it also argues that the current system is not a sustainable one for America, as “[t]here is no economic value in conferring a patent monopoly except for an invention that will have a significant impact.” While Gleevec may meet the standard for a drug with a “significant impact,” many common U.S. prescription drugs do not.