Six Super-Devious Big Pharma Tricks

Just about everyone is experiencing the shock of astonishing increases in their health insurance costs, including, interestingly, members of Congress who buy health insurance through Obamacare plans.

We tend to forget that all insurance premiums (health, auto, property, life) are pegged to the benefits paid. People are living longer, so life insurance is actually cheaper and easier to get. Your car insurance rises or falls depending on your driving record.

But US health insurance premiums are skyrocketing because insurers are being forced to pay vast sums of money for medical goods and services that cost a lot less elsewhere in the world.

In previous Health Tips, I’ve used the metaphor “pigs at a trough” in an attempt to describe the pervasive greed of a medical system that places the needs of patients at relatively low priority. Journalist-lawyer Steven Brill in his brilliant book America’s Bitter Pill looks at the villainy in the hospital system. From a $10 Band-Aid to the $5,000 emergency room visit for a bladder infection, these outrages should be the topic of folk songs (Joan Baez, where are you?) or at least legislation.

Nobody loves Big Pharma
Just about everyone detests Big Pharma and its endless price-gouging shenanigans. If you’re following the Darth Vader of Big Pharma, Martin Shkreli, you surely felt the pleasurable tingle of schadenfreude envisioning him in a maximum security prison for his online threats against Hillary Clinton.

Big Pharma is master of the super-pricing universe. While a drug is still guarded by patent, the profits are simply mind boggling:

  • Viagra runs $70 a tablet (actually, there’s a trick to get a generic version for about $1–ask your doctor).
  • Humira, the world’s most profitable drug, costs $6,000 a month.
  • Tecfidera (for multiple sclerosis) costs $7,000 a month.
  • Sofosbuvir (for hepatitis C) will cost you $28,000 a month (though it’s taken just three months a year).

And yes, prices are high in part because these drugs cost a fortune to develop. A typical new drug (as opposed to a copycat knock-off) requires more than $350 million to bring to market. To allow a Big Pharma company the opportunity to earn the money back, the drug is protected by patent. Okay, I understand. That’s why we have health insurance.

However, once the drug goes off patent its price can plunge by as much as 90% and Big Pharma’s profit stream vanishes. Unless, of course, it thought ahead and sensibly had some new drugs in its pipeline.

So you can only imagine that a Big Pharma company will do anything possible to extend its patent on a drug. Here are its six most egregious underhanded tricks to accomplish that.  Understand that when Big Pharma pulls a semi-illegal effort and the Federal Trade Commission cries “Foul!,” the patent battle can go on for years.

Trick #1  Buy off the competition
During the final year or two of a patented drug, generic manufacturers, salivating like wolves, start filing applications with the FDA. The first filer gets to be the sole generic manufacturer for six months. This lucky winner can actually keep the drug at its original price during these six months. After this period, other companies get the green light, a dozen generics hit the market, and prices plummet. So Trick #1 is for the Big Pharma patent-holder to give the winner of the first filing bags full of hard cash to not manufacture the drug, thus permitting the profit stream to continue for another six months.

Trick #2  The patent-holder creates a separate generic company, gets the first filing, and prepares for a steady profit stream for another six months without having to buy off anyone.

Trick #3  Tweak the drug and get a new patent
The most common way this is achieved is to create an extended-release version, easily done by coating the tablet with a slowly dissolving veneer. Generic muscle relaxant cyclobenzaprine (Flexeril) costs ten cents a tablet. The time-release version (Amrix) costs $33 a tablet. Just as the Alzheimer’s drug Namenda was about to go off patent, the company introduced Namenda XR (extended release, at $15 a tablet) and pulled the regular Namenda off the market. This chicanery was reversed in the courts.

Trick #4  Discover a new use for the drug
The Orphan Drug Act, which sounds ever-so-kindly, helping orphans and all, allows a Big Pharma company to market its patent drug for a new condition, usually extremely rare and often a childhood disease. Some illnesses are so rare (100 to 200 new cases a year) that no company will spend research money developing one of these zero-profit drugs. But if you already own a drug that’s still protected by its patent, you can try for another seven years of protection for what’s called a “new clinical indication” and if you’re lucky your profit stream continues unabated.

Astra Zeneca’s statin Crestor was legitimately found to be effective for homozygous familial hypercholesterolemia, but the company had the bad luck to face an unsympathetic judge. However, 40 to 50 drugs each year do get patent extensions you didn’t know about. Have you ever said to your pharmacist, “Gee, I’ve been taking this for years. Shouldn’t it have gone generic by now?”

Trick #5  Patent everything
A Big Pharma company can patent a lot more than the drug itself. A company can patent its tablet coating, its dosing schedule, and its clinical uses. The EpiPen is expensive because the pen and not the drug is patented. Humira, the world’s most profitable drug, has more than 100 patent claims attached to it.

Trick #6  Indefinite patent (you will not believe this one…)
Allergan Pharmaceuticals, facing the inevitability of its super-profitable eye drop Restasis going generic, transferred the intellectual property rights to the St. Regis Mohawk Tribe in upstate New York. They paid the tribe $13 million to hold the patent and agreed on a contract that earns the tribe about $12 million a year in royalties. Because Native American tribes can claim sovereign immunity, they’re exempt from lawsuits from generic makers and thus Restasis can stay on patent indefinitely.

When Trump was running for office, he vowed that he’d be the one to fight Big Pharma and get drug prices down. After he became president, he had a single meeting with industry representatives and did a total reversal, claiming Big Pharma needed the profits for research and development.

My guess is he saw how smart these guys are, quickly checked his stock portfolio, and bought more Big Pharma stock.

The American Mercy Tour

September opens Chicago’s stellar theater season. If you’ve got an evening to spare, I urge you to see The American Mercy Tour at the Greenhouse Theatre on Lincoln Avenue. Written and acted by Broadway star Michael Milligan, this is a play in two parts (technically it’s two distinct plays), that humanizes our failing healthcare system.

In part one, “Mercy Killers,” Milligan plays Joe, an auto mechanic describing the slow decline and ultimate death of his beloved wife, including their dealings with doctors, hospitals, and insurance companies.

Part two, “Side Effects,” presents a completely different Milligan, now a burned-out family doctor talking to his lawyer about selling his practice to a mega-group and becoming an employee. He walks onstage yelling into his cell phone, trying to get prior authorization for a patient’s asthma inhaler. From his briefcase, he removes a stack of uncompleted charts, insurance forms, and a bottle of Scotch. It goes on from there.

Milligan has performed this piece all over the world, but this is the first time both plays are being offered together on a Chicago stage. The price won’t stop you: tickets are pay-what-you-can. Most people seem to be offering about $20.

Be well,
David Edelberg, MD

4 comments on “Six Super-Devious Big Pharma Tricks
  1. dan krause says:

    Dr. E:
    thank you for another provocative column. It brought to my mind a quote from Lily Tomlin; “No matter how cynical you become, it’s never enough to keep up.”

  2. Jimmy Carrane says:

    Dr Edelberg you are a great writer and I really enjoy your blogs.

  3. Susan says:

    Big Pharma has been doing these things for years, which is unfortunate. However, the noticeable increase in our costs as patients and consumers is due to Obama care. Doctor it shocks me that you refuse to admit the abysmal failure that is Obama care! These increases were predicted years ago when the bill was fist passed. Now that the increases are showing up and people are complaining you attempt to explain it all away on big Pharma. How about saying it’s a combination of the two. I know it will be painful for you to criticize Obama, but try being honest with your patients and try not letting your politics cloud every blog you write.

  4. Cathy says:

    Just mortifying. How do those that profit at the expense of others sleep at night? Thank you for shedding much-needed light on this subject. I appreciate your insight & wisdom! Knowledge is power.

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