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As scholarly works by this author and others have noted, agreements not to compete and activities that abuse the regulatory process to block competitors raise antitrust concerns.318 Thus, when pharmaceutical company behavior improperly delays or impedes the entry of generic competition, that behavior runs contrary to the open, competitive market environment for which antitrust law yearns.

The theoretical concerns translate into tangible damage to society as well. With patents, the legal system chooses to tolerate certain societal losses for the innovation effects that may result. When brand-name companies extend their monopoly power beyond the expiration of the patent, however, there are unanticipated deadweight losses to society in the form of higher prices. Whether Congress has chosen the optimal parameters for the patent system is a separate question. Once those parameters are set, behaviors that cause additional deadweight losses for society are contrary to the system’s incentive structure, and the damage to society should not be tolerated.

Bridgette, Hazel V. J. Moir, Belinda Townsend, Burcu Kilic, Anne-Maree Farrell, Tessa Keegel, and Deborah Gleeson, 04-15-2020, “What is the impact of intellectual property rules on access to medicines? A systematic review” Global Health, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9013034/

Generic drugs are more affordable than patented drugs as they are usually more closely priced to the marginal cost of production when there are three or more generic drugs available [113]. It is therefore unsurprising to find that all articles that explored various facets of generic market entry and or patent expiry found positive impacts for access to medicines. For example, the most salient finding in this group of 22 articles was that generic market entry resulted in significant reductions in the cost of medicines [23, 58, 60, 61, 64–67, 69, 73, 75–78, 119] but not necessarily in the price of the originator drug [72]. One study found generic status to be the most consistent predictor of a drug’s price [61]. The introduction of the US Hatch-Waxman Act in 1984 was designed, inter alia, to promote early and efficient access to generic drugs. This was to be done by facilitating accelerated approval by the Food and Drug Administration (FDA), the national regulator, to allow for market entry of generics as soon as patents expired, or were otherwise found to be invalid or not infringed [14]. Studies which focused on generic market entry in the USA found that the introduction of the Hatch-Waxman Act resulted in a rise in patent challenges [63], an increase in the number of patents associated with each medicine [105] a rise in the generic share of the market [64], consumer welfare gains [62] and a decrease in daily treatment costs [64]. To maximise profits, however, many originator brands patent reformulations to lessen the financial impact of patent expiry [68]. Among best-selling drugs, Feldman found that over 70% of medicines listed in the Orange Book added additional patents or data exclusivity privileges to the medicine, indicating extensive use of secondary patenting [105]. Nearly all of these studies were set in high-income countries, however, even between EU Member States significant wealth disparities exist and access to medicines is not uniform. One multi-country EU study found that affordability constraints impacted on drug access and when generic alternatives entered the market access to effective medicines improved, most notably in lower-income EU Member States [57]. These findings have implications for settings where patents and high drug prices compromise people’s access to affordable generics. Compulsory licensing, parallel trade and other flexibilities TRIPS flexibilities such as compulsory licensing or even the threat of compulsory licensing, increase drug availability [48], increase treatment coverage and decrease drug prices [48, 49]. Compulsory licensing has most commonly been implemented to facilitate greater access to ARV medication [48–50]. Interestingly, compulsory licensing seems to have become less frequent since 2006. Parallel trade appears to have a more modest impact on drug prices [52, 53] than compulsory licensing, however, there were very few studies on parallel trade, all of which are focused on EU Member States. Despite this, most showed cost savings from parallel trade [54–56]. These findings are in keeping with what TRIPS flexibilities were originally designed to do: provide governments with the ‘policy space’ to mitigate the negative impacts of patents, such as excessively high drug prices and lack of competition [120]. Other systematic reviews The findings of this study provide rich empirical detail and findings that add to other systematic reviews. Barlow et al’s systematic review of the health impact of trade and investment agreements, also found one study [35] showing increased access to medicines due to compulsory licensing. Islam et al’s review of IP provisions in trade treaties on access to medicines in LMICs also found that IP provisions in trade agreements increased drug prices and decreased consumer welfare [16]. However, this review did not include high income countries or IP rules unrelated to trade agreements. Trachtenberg et al’s policy brief on trade agreements and access to medicines had a narrower scope of review but included a useful critique of the methods the studies employed [121]. This review included some of the same articles and reached the same conclusions as the current study; IP provisions in trade agreements have a negative impact on the price and availability of medicines. The current review included a broader set of studies and is useful in providing a more complete assessment of the current state of knowledge.

Lunna Lopes, Alex Montero, Marley Presiado, and Liz Hamel, 3-1-2024, "Americans’ Challenges with Health Care Costs," KFF, https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/

Prescription Drug Costs For many U.S. adults, prescription drugs are a component of their routine care. More than one in four (28%) adults say it is either “somewhat” or “very difficult” for them to afford to pay for prescription drugs. Affording prescription drugs is particularly difficult for adults who take four or more prescription medications (37%) and those in households with annual incomes under $40,000 (40%). Black and The high cost of prescription drugs also leads some people to cut back on their medications in various ways. About one in five adults (21%) say in the past 12 months they have not filled a prescription because of the cost. A similar share (21%) say they have taken an over-the-counter drug instead of getting a prescription filled – rising to about one third of Hispanic adults (32%) and more than one in four adults (27%) with annual household incomes under $40,000. About one in ten adults say that in the past 12 months they have cut pills in half or skipped doses of medicine due to cost. (Source: KFF Health Tracking Poll: July 2023)

Lunna Lopes, Alex Montero, Marley Presiado, and Liz Hamel, 3-1-2024, "Americans’ Challenges with Health Care Costs," KFF, https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/

About half of U.S. adults say it is difficult to afford health care costs, and one in four say they or a family member in their household had problems paying for health care in the past 12 months. Younger adults, those with lower incomes, adults in fair or poor health, and the uninsured are particularly likely to report problems affording health care in the past year. The cost of health care can lead some to put off needed care. One in four adults say that in the past 12 months they have skipped or postponed getting health care they needed because of the cost. Notably six in ten uninsured adults (61%) say they went without needed care because of the cost. The cost of prescription drugs prevents some people from filling prescriptions. About one in five adults (21%) say they have not filled a prescription because of the cost while a similar share say they have instead opted for over-the-counter alternatives. About one in ten adults say they have cut pills in half or skipped doses of medicine in the last year because of the cost. Those who are covered by health insurance are not immune to the burden of health care costs. About half (48%) of insured adults worry about affording their monthly health insurance premium and large shares of adults with employer-sponsored insurance (ESI) and those with Marketplace coverage rate their insurance as “fair” or “poor” when it comes to their monthly premium and to out-of-pocket costs to see a doctor. Health care debt is a burden for a large share of Americans. About four in ten adults (41%) report having debt due to medical or dental bills including debts owed to credit cards, collections agencies, family and friends, banks, and other lenders to pay for their health care costs, with disproportionate shares of Black and Hispanic adults, women, parents, those with low incomes, and uninsured adults saying they have health care debt. Notable shares of adults still say they are worried about affording medical costs such as unexpected bills, the cost of health care services (including out-of-pocket costs not covered by insurance, such as co-pays and deductibles), prescription drug costs, and long-term care services for themselves or a family member. About three in four adults say they are either “very” or “somewhat worried” about being able to afford unexpected medical bills (74%) or the cost of health care services (73%) for themselves and their families. Additionally, about half of adults would be unable to pay an unexpected medical bill of $500 in full without going into debt.

Let’s assume, for the moment, that we make no changes to our current healthcare system and that future growth in Medicare and Medicaid spending accords with the Congressional Budget Office’s projections. Under this highly optimistic scenario, the country is, as we know, short today— not tomorrow—$70 trillion. It’s hard to wrap one’s brain around $70 trillion. But let’s try. The following are four ways to come up with $70 trillion in present value without cutting future growth in Medicare and Medicaid. Each of these policies would need to be implemented immediately and permanently. Raise personal and corporate federal income taxes by 70 percent. Raise payroll tax rates by 109 percent. Cut all federal purchases of goods and service— from buying air force jets to paying the salaries of Supreme Court Justices— by 91 percent. Cut social security benefits by 90 percent. Adopting any one of these policies or some combination would be incredibly painful. But waiting is no alternative. It just makes the requisite adjustments larger and more difficult. Another option is to implement each of the four policies partially; for example, we could implement each policy at one-fourth strength. But implementing one-fourth of four terribly painful policies still adds up to one terribly painful course of action. The reality is that no American politician would endorse any of these policies or, for that matter, any combination of them that produces $70 trillion in present value. So what exactly will happen if we don’t radically reform the healthcare system and simply let Medicare and Medicaid expenditures continue to grow? The answer is that the government will need to make money by printing it. This practice dates to at least the third century a.d. when the Romans ran a tremendous hyperinflation. In the twentieth century, twenty countries ran hyperinflations (monthly inflation rates exceeding 20 percent) by printing money to pay their bills. The most famous (or infamous) example is the hyperinflation in the early 1920s in Weimar Germany. Prices rose so fast that workers were paid in wheelbarrows full of cash, which they immediately used to purchase goods so their money wouldn’t be worthless by the next day.14 The United States is hardly immune to hyperinflation. This is why David M. Walker, comptroller general of the United States, and Ben Bernanke, chairman of the U.S. Federal Reserve, are pulling out their remaining hairs worrying about our long-run fiscal situation. 15 They realize that financial markets can turn on a dime when they start to smell a problem. Doing so in this context means that both foreign and domestic investors would lose confidence in the dollar and attempt to unload their holdings of U.S. securities, particularly long-term U.S. Treasury bonds. This would lead to a crash of both the U.S. bond and stock markets, drive up nominal and real interest rates, and force the Federal Reserve to try to lower interest rates by buying up U.S. bonds. That would require the Fed to create (print) money— precisely what the financial markets will come to fear because they know it fuels inflation. The point of describing this process is to indicate that when fiscal policy gets sufficiently out of control (the U.S. situation), central banks start to lose control of their monetary independence and are forced to accommodate the inflationary process. How high would inflation get in the United States? Very high. Most federal government expenditures are explicitly or implicitly indexed to inflation, so to really make money by making (that is, printing) money, the government will have to beat the indexation, which means running ever higher levels of inflation. Running a high inflation, let alone a hyperinflation, would mean dramatic increases in not just nominal but also real interest rates, which would severely damage the economy and its revenue-generating capacity. I and many other academics, business leaders, and government officials have been sounding this fiscal siren for years. Yet the precipitous crisis we’ve predicted has not developed. As a result, concern over the fiscal gap appears overblown to many observers. It’s not. Our fiscal problem is real and very serious. The best way to grasp what’s going on is to think of a very slowly growing, untreated cancer, which is barely detectable for many years. Then, virtually from one day to the next, it spreads rapidly and alters the functioning of a major organ in a fully perceptible manner. Ex post the cancer is obvious; ex ante no one saw it coming. Speaking of seeing things coming, how many people saw Argentina’s fiscal crisis coming before it hit? How many realized the Russians were in deep trouble in the late 1990s? How many predicted the East Asian crisis or the Mexican peso crisis? And how many foresaw each of the past century’s twenty hyperinflations? The answer is not many. And the common factor here is that almost all of these financial and economic collapses were rooted in a tremendous fiscal gap. The fact that the collapses were missed by most observers is not surprising. It takes a long time to run a well-functioning economy down the tubes. It also takes careful eyes and reliable data to really understand a country’s true long-term fiscal position. And it takes international consensus, notoriously slow to form, that an economy is really underwater and can’t be rescued by better fiscal policies or improvements in productivity or technology for the alarm to sound. The best indicator that a country’s fiscal policy is out of control and leading an economy to live beyond its means is its national saving rate. Whether the government directly spends an increasing share of a nation’s income or arranges its fiscal affairs so that the public does so, the result is higher total consumption relative to national income and a lower ratio of national saving to national income— the national saving rate. In the U.S. case, it’s taken almost five decades of intergenerational redistribution from young savers to old spenders to lower the U.S. national saving rate from its 1960 value of 12.6 percent to its current value of 2.9 percent. 16 And because the United States is saving so little, we can’t keep up with our country’s demand for investment. Today’s difference between domestic investment and national saving— called the current account deficit —is huge. Indeed, for every dollar we Americans are investing in our country, foreigners are investing close to three dollars. Much of this foreign investment in the United States is in the form of foreigners purchasing claims to U.S. financial assets. For example, the Chinese government now holds upward of $1.3 trillion in U.S. government bonds. Suppose the Chinese were to wake up tomorrow and say, “Gee, we’re getting really worried about the U.S. long-term fiscal position. We’re getting concerned that the U.S. government will start to print money to pay its bills and cause inflation. We don’t want to be sitting here holding claims to worthless dollars. We should sell our U.S. bonds and hold other assets that are more secure.” If the Chinese do pursue this line of thought and decide to sell their U.S. bonds, en masse or even in a significant part, there is no question that it would precipitate a U.S. financial crisis of the first order. There are simply too many bond traders around the world eyeing the Chinese-U.S. bond position nervously for this not to happen. The Japanese and the Koreans hold lots of U.S. bonds as well. They too could jump ship at any time and tip the boat, if not sink it, in the process. Surely they and the Chinese are aware of the fact that the U.S. dollar has declined relative to the euro by more than 30 percent in recent years. This depreciation of the dollar has, by itself, represented a form of default on their U.S. bond holdings, since these bonds now can only buy roughly 70 percent of the European goods and services they could formerly purchase. How concerned are world investors about America’s fiscal finances? How closely are they examining the huge recent rise in federal discretionary spending? How much does Medicaid’s huge expansion matter to their thinking? Are they fully aware of the costs of Medicare Part D? How tired are they getting of holding U.S. securities while the dollar continues to sink? The answer is we don’t know. What we do know is that the United States has been pumping more and more air into an already overinflated tire and that there is a point at which it will burst unless the pressure, particularly in the area of healthcare spending, is released.

In recent history, the U.S. economy has experienced the near catastrophic failure of two major market segments. The first was the auto industry and the second was the housing industry. While each of these reached their breaking point for different reasons, they both required a significant government bailout to keep them from completely melting down.¶ What is also true about both of those market failures is that, looking back, it’s easy to see the warning signs. What happens if health care is the next industry to suffer a major failure and collapse? It’s safe to say that a health care meltdown would make both the automotive and housing industries’ experiences seem minor in comparison. While that may be hard to believe, it becomes clear if you look at the numbers.¶ The auto industry contributes around 3.5 percent of this country’s GDP and employs 1.7 million people. This industry was deemed “too big to fail” which is the rationale the U.S. government used to finance its bail out. From 2009 through 2014, the federal government invested around $80 billion in the U.S. auto industry to keep it from collapsing. Health care is five times larger than the auto industry in terms of its percentage of GDP, and is ten times larger than the auto industry in terms of the number of people it employs.¶ The construction industry (which includes all construction, not just housing) contributes about 6 percent of our country’s GDP and employs 6.1 million people. Again, the health care market dwarfs this industry. It’s three times larger in terms of GDP production and, with 18 million people employed in the health care sector, it’s three times larger than construction in this area, too.¶ These comparisons give you an idea of just how significant a portion health care comprises of the U.S. economy. It also begins to help us understand the impact it would have on the economy if health care melted down like the auto and housing industries did.¶ So, let’s continue the comparison and use our experience with the auto and housing industries to suggest to what order of magnitude the impact a failure in the health care market would cause our economy. The bailout in the auto industry cost the federal government $80 billion over five years. Imagine a similar failure in health care that prompted the federal government to propose a similar bailout program. Let’s imagine the government felt the need to inject cash into hospital systems and doctors’ offices to keep them afloat like they did with General Motors.¶ Since health care is five times the size of the auto industry, a similar bailout could easily cost in excess of $400 billion. That’s about the same amount of money the federal government spends on welfare programs. To pay for a bailout of the health care industry, we’d have to eliminate all welfare programs in this country. Can you imagine the impact it would have on the economy if there were suddenly none of the assistance programs so many have come to rely upon?¶ When the housing market crashed, it caused the loss of about 3 million jobs from its peak employment level of 7.4 million in 1996. Again, if we transfer that experience to the health care market, we come up with a truly frightening scenario. If health care lost 40 percent of its jobs like housing did, it would mean 7.2 million jobs lost. That’s more than four times the number of people who are employed by the entire auto industry — an industry that was considered too big to be allowed to fail. The loss of 7.2 million jobs would increase the unemployment rate by 5 percent. That means we could easily top the all-time high unemployment rate for our country.¶

AFTER DOUBLING TO $20 trillion since 2009, the national debt is now projected to soar to an unfathomable $92 trillion over the next 30 years. At that point, depending on interest rates, between 60 and 100 percent of all individual income taxes will go towards paying the interest on this debt.¶ What is driving the federal budget into bankruptcy? Health care spending.¶ [ OPINION: The Senate's Obamacare Repeal Effort Has a Fatal Flaw ]¶ The problem is not tax revenues (they will continue growing above historical averages), nor other spending programs (Social Security is the only other major category growing as a share of the GDP).¶ Rather, health care is devouring the budget.¶ Remember this as Congress debates Obamacare and Medicaid reform. Critics denounce Republican attempts to "slash health care spending." In reality, their proposals would slow the growth of health care spending relative to the current baseline projections – projections that are completely unsustainable anyway.¶ After staying between two and three percent of the economy in the 1980s and 1990s, federal health spending has jumped to 5.5 percent of GDP today, on its way to a projected 9.3 percent thirty years from now – and even that assumes a long-term slowdown in the growth of per-capita health care costs.¶ For context, the entire federal budget has remained around 20 percent of GDP for the past 50 years. Each percentage point of the GDP translates into $190 billion, or $1,500 per household. So that overall growth from 3 to 9.3 percent of GDP would eventually require a permanent tax increase of $9,450 per household – a figure that would rise with incomes each year.¶ Federal spending cannot grow faster than the economy indefinitely. At some point, something has to give. And the "easy solutions" are fool's gold:¶ [ SEE: EDITORIAL CARTOONS ON OBAMACARE ]¶ Cut defense? It is already on track to fall from 4.7 to 2.7 percent of GDP between 2010 and 2027 – leaving it at 1930s levels.¶ Tax the rich? The amount of annual income earned over the $1 million threshold currently totals 4.4 percent of GDP – one-third of which is already paid in federal taxes. At most, an additional one percent of GDP could be extracted before exorbitant marginal tax rates begin changing taxpayer behavior, harming the economy and costing revenue.¶ Single-payer health care? Sen. Bernie Sanders' 2016 proposal was scored as adding $32 trillion in new costs over the decade, in part because American proposals avoid the sacrifices and limitations that other countries mandate.¶ Just keep borrowing? According to the CBO baseline, the resulting national debt would bring crushing interest costs that eventually bankrupt the federal government.

Rising healthcare costs hamper the ability of U.S. businesses to compete internationally. We at New America have estimated that U.S. manufacturing firms spend almost three times as much per worker per hour for healthcare as our most important foreign competitors--$2.38 versus $0.96. Healthcare costs drive employers to move jobs overseas, grow jobs outside of the United States, and limit the ability of firms to invest to improve productivity [and] compete more effectively in the future.¶ Many economists argue that employer premium contributions are perfectly offset by reduced wages, so how can health costs affect competitiveness? Traditional economics is grounded in long-run equilibrium, but recurrent and random premium growth prevents equilibrium from ever being reached. Workers’ strong preferences for nominal money wages [in other words, to be compensated in terms of money paid, rather than in terms of purchasing power or added benefits] preclude employers from lowering wages to absorb the entire "shock" of higher premiums within one year. A single large shock in premiums would be taken out of wage increases over a few years, but next year’s premium shock starts the multiyear cycle, again, every twelve months. So in fact, businesses do bear some of the cost of premium inflation, which is precisely why employers care so much more about it than most economists think they should.¶ "Health reform legislation now before Congress would begin to slow healthcare cost growth, the outcome employers need most. – Len Nichols¶ Analysis also shows that the U.S. economy loses as much as $207 billion annually because of the lost productivity stemming from the poor health and shorter lifespan of the uninsured. Employers notice the workplace productivity loss, which for a full-time worker equals four days a month in lost work time.¶ Health reform legislation now before Congress would begin to slow healthcare cost growth, the outcome employers need most. It would do so by conveying that business as usual--fee for service, "pay for volume"--is over, and by directly changing incentives for higher quality and more efficient care. In addition, investments in health information infrastructure and data on what treatments work best for what patients will benefit all payers--private and public alike.¶ Some say that we cannot afford health reform in the current economy. But the reality is that U.S. competitiveness cannot afford for us to fail, again.¶ Paul N. Van de Water, Senior Fellow, Center on Budget and Policy Priorities¶ Health reform that expands coverage to the uninsured while slowing the growth of healthcare costs is crucial for strengthening the U.S. economy. The soaring growth in healthcare costs is reducing the competitiveness of U.S. businesses, holding down wage growth as businesses shift more employee compensation to cover health insurance costs, and, more than anything else, driving federal budget deficits that are projected to explode in the coming decades.\

(Stuart S., “Global Power: Key Issues,” in The Future of US Global Power: Delusions of Decline, Palgrave, p. 57-58)

In the first instance, structural26 budget deficits are more likely to be symptoms of incipient overstretch then prima facie evidence of national decline. Overstretch suggests a need to realign commitments and resources, hence spending and revenues. In principle, persistently large deficits demand adjustments that need not materially impact the underlying drivers of longer-term prosperity. In contrast, if fiscal imbalances prove sufficiently chronic, they can eventually trigger growth-inhibiting alterations in microeconomic incentives. In such cases, incipient overstretch can mutate into a more primary threat to the system's underlying dynamism. In its classical formulation, “imperial overstretch” refers to unrestrained and exorbitant foreign military campaigns. The latter can be said to redound to the detriment of great powers by crowding out more productive capital investments. Yet in contrast to widespread impression, the US fiscal challenge does not primarily reflect out-of-control defense spending and the burden of foreign entanglements. If this were the case, then the feasibility of financing an ever-expanding global power projection would be brought into question. This neither minimizes the sizable resources the US commits to military-related spending nor denies that cutbacks in such spending can help facilitate overall fiscal adjustment. Rather, the point is that an endemic failure to rein in explosive economy-wide health care costs with the latter's implications for public sector health insurance programs – the real fiscal challenge – will do more to endanger macroeconomic stability and eventually erode the material foundation of US power (see chapter 8). By viewing (health-care driven) fiscal deficits as a necessary manifestation of overstretch is misguided for a more basic reason. The root of the US fiscal problem involves unsustainable commitments – particularly in the area of health expenditure – made by government to its citizens. It is decidedly not a question of any dearth of national resources to adequately meet the health needs of the population at large. As the richest country in the world, the US possesses more than enough resources to achieve this goal. The relevant political and social question is whether the population’s basic health requirements are best met via ever-expanding entitlements requiring increasingly higher levels of taxation.

David Dranove, Craig Garthwaite, and Manuel Hermosilla, 09-02-2020, "Pharma Companies Argue That Lower Drug Prices Would Mean Fewer Breakthrough Drugs. Is That True?," Kellogg Insight, https://insight.kellogg.northwestern.edu/article/pharma-companies-argue-lower-drug-prices-fewer-breakthrough-drugs

Remdesivir, the antiviral drug that’s shown promising results in treating COVID-19, costs $3,120 for a five-day regimen. As eye-popping as that number is, it pales in comparison to many other drugs on the market, some of which have price tags that reach up to seven figures for a typical treatment course. In the U.S., such high drug prices can limit access for many and drive up insurance costs, spurring ongoing debate: Do biopharma companies really need to charge as much as they do? “The industry’s response has been just as constant as the complaints,” says David Dranove, a strategy professor at Kellogg. “They say they have to cover their research costs, and if they don’t, they’ll have to cut back on research.” In general, developing truly innovative drugs requires more research dollars than developing more incremental ones. It’s also riskier, because the odds of success are unknown. Without sufficient financial incentive, pharmaceutical companies argue, they will deliver fewer innovative drugs, which ultimately means worse health outcomes. But is this really the case? Does less money-making potential truly lead pharma firms to cut back on innovation? It’s a critical question, given that the U.S. government leaves drug pricing largely to market forces. “We do that as a country because we’re interested in promoting future innovation,” says Craig Garthwaite, a professor of strategy at Kellogg. Effectively, the U.S. is willing to trade off some access to drugs—due to high pricing—to secure more innovative drugs in the future. To investigate the connection between profit and research, Dranove and Garthwaite teamed up with Manuel Hermosilla at Johns Hopkins. But instead of looking at whether reduced money-making potential prompts firms to cut back on innovation, they studied the opposite: Does the promise of higher profits lead companies to plow more money into innovative research? Specifically, they explored how biopharma research changed following the creation of Medicare Part D, which increased prescription-drug coverage for Americans over age 65. Part D resulted in new coverage of about 5 million seniors, meaning more purchases of prescription drugs and more pharma-company profits. While 5 million people may sound like a lot, in the context of the $400 billion U.S. pharmaceutical market, this was a “relatively modest shock,” as the researchers write. Still, the impact allowed for an effective research experiment. They wanted to see if the expected boost in drug-manufacturer profitability resulted in truly novel therapies aimed at older patients. Or would companies play it safe by focusing development efforts on copycat versions of drugs already targeting this population, such as those treating high cholesterol? The researchers found evidence of the latter: post-Medicare Part D, drugmakers overwhelmingly pursued new versions of existing drugs, rather than innovative products. However, this implies that converse is also true: incremental price reductions may not stifle innovation. “When the biopharma industry says that any change to drug pricing is going to destroy the innovation engine, that’s not really true,” Garthwaite says. “Our study puts some bounds on that.” Defining Drug Novelty It is well established that pharmaceutical firms focus on products that they perceive as lucrative. “Drug companies invest in areas where they think there’s demand for their developments, like any profit-maximizing firm,” Dranove says. But critics have argued that this process doesn’t necessarily result in innovative drugs that improve social welfare. Money-making potential, the critics claim, typically pushes drugmakers to bring the third or fourth version of a drug to market rather than seek a cure for a disease we can’t currently treat, like pancreatic cancer. To test this claim, the Kellogg researchers first had to define what counts as a pharmaceutical “novelty”—that is, what makes a drug truly innovative. The researchers settled on a definition: “Do drugs represent new options for patients that might not otherwise exist?” Garthwaite says. Based on that line of thinking, they then examined whether clinical trials for a given drug fit the bill. Specifically, they looked at “target-based actions” (TBAs), or what a prospective drug product actually did in the body—what biologic entity it targeted, and with what function, such as blocking a specific lipid to reduce cholesterol. More novel drugs tend either to focus on a new TBA or to use a largely unprecedented combination of multiple TBAs. Expected Profits and Innovation The study used pharmaceutical research data from 1997 through 2018 on over 70,000 molecules developed globally by over 4,300 biopharma companies. This time period spanned the advent of Medicare Part D, which was created as part of the Medicare Modernization Act of 2003, and became effective in 2006. This made possible a “natural experiment” on the relationship between expected profits and innovation. Starting in 2006, pharmaceutical companies would have expected an increase in profits for drugs targeting older patients, due to the increased prescription-drug coverage for this population. The question, then, was whether that increased expected profit would yield greater innovation in drugs targeting seniors—or would companies play it safe by focusing on copycat versions of existing drugs? The Choice: Playing It Safe The study showed little change in research on scientifically novel drugs for seniors in response to Medicare Part D. “We saw an increase in drug research targeting seniors after the expansion of Medicare Part D,” Dranove says, “but it was largely for drugs with the same target-based actions as previous ones—addressing essentially the same condition in the body.” “When the biopharma industry says that any change to drug pricing is going to destroy the innovation engine, that’s not really true.” — Craig Garthwaite From 2012 to 2018, there was an increase of 106 percent in the number of clinical trials for less-novel drugs targeting seniors, but only a 14 percent increase in trials for the most novel pharmaceuticals. That means that in response to the new financial incentives, drug companies focused largely on copycat versions of drugs rather than truly novel products. “What the new Medicare Part D was affecting are drugs that are only valuable at the margin,” Garthwaite says. A Green Light for Pricing Regulation The main practical implication of the finding is that incremental changes to drug profits probably won’t affect innovation in a noticeable way. On one hand, this is discouraging news for healthcare professionals and policymakers who might otherwise champion incremental incentives in order to boost innovation. But on the other, it also suggests that policies that slightly lower drug prices won’t stifle pursuit of novel drugs. In short, the researchers argue that minor changes to drug-company profits will neither encourage nor discourage innovation. “Increasing competition or decreasing returns from developing products won’t kill the biopharma industry,” Garthwaite says. That means Americans could potentially enjoy lower drug prices—and the access that goes with these—without suffering a costly loss of biopharma innovation. “That social impact is ultimately what we care about,” Garthwaite says. The researchers also point out that copycat drugs developed in response to Medicare Part D did represent some value to patients—Lipitor was far from the first cholesterol-reducing drug to market, for example, but it improved upon existing ones and became a high-grossing product for Pfizer, a win–win. “The fifth [copycat] drug brought to market may have the fewest side effects,” Dranove says. “Or it may be the one that drives prices down.”

Jomo Kwame Sundaram and Vladimir Popov, "Economic Crisis Can Trigger World War," Inter Press Service, 2-12-2019, http://www.ipsnews.net/2019/02/economic-crisis-can-trigger-world-war/

KUALA LUMPUR and BERLIN, Feb 12 2019 (IPS) - Economic recovery efforts since the 2008-2009 global financial crisis have mainly depended on unconventional monetary policies. As fears rise of yet another international financial crisis, there are growing concerns about the increased possibility of large-scale military conflict.

Whether the pandemic ends soon or is longer-lasting, the global economy and global geopolitics are very likely to have a different shape than they had before its onset. The high likelihood of a world depression and the differential responses across countries – especially those of China and the US – is changing the existing distribution of power across the world.

After going over recent trends in the US’s superpower status, I will discuss the pandemic’s implications for the rise of China as a challenger to the US’s position and a consequent urgent importance for improving global conflict management. Urgency is justified because international institutions have atrophied over the past few decades whereas the possibilities for conflict are expanding.

There is no wide-reaching entitlement funding crisis, no deep-rooted connection between runaway debts and the broad suite of pension and social welfare programs that usually get called entitlements. The problem is linked to entitlements, but it’s much narrower: If the U.S. budget collapses after hemorrhaging too much red ink, the main culprit will be rising health care costs. Aside from health care, entitlement spending actually looks relatively manageable. Social Security will get a little more expensive over the next 30 years; welfare and anti-poverty programs will get a little cheaper. But costs for programs like Medicare and Medicaid are expected to climb from the merely unaffordable to truly catastrophic. Part of that has to do with our aging population, but age isn’t the biggest issue. In a hypothetical world where the population of seniors citizens didn’t increase, entitlement-related health spending would still soar to unprecedented heights — thanks to the relentlessly accelerating cost of medical treatments for people of all ages.1 What’s needed, then, is something far more focused than entitlement reform: an aggressive effort to slow the growth of per-person health care costs. Or — if that’s not possible — some way to ensure that the economy grows at least as fast as the cost of health care does. Diagnosing the debt: It’s not about demographics America’s long-term budget problem is very real. Already, the federal government has a pile of publicly held debts amounting to around $15 trillion, or about 75 percent of the country’s entire gross domestic product. That’s the highest level since the 1940s, yet the debt burden is expected to double by 2047 and reach 150 percent of the GDP, according to the Congressional Budget Office.2 It makes sense to list entitlement spending among the culprits for the growing national debt, given that these programs have grown from costing less than 10 percent of the GDP in 2000 to a projected 18 percent in 2047. Part of this is simple demographics: As America ages, more of us become eligible for Social Security and Medicare, thus driving up expenses.3 But there’s a crack in this demographic explanation: It only makes sense for the next 10 to 15 years. That’s the period of rapid transition when graying baby boomers will boost the population of seniors from around 50 million to more than 70 million. A change like that should indeed produce a surge in entitlement spending as those millions submit their enrollment forms. By 2030, however, this wave will start to ebb, leaving the elderly share of the population at a roughly stable 20 to 21 percent all the way through 2060, based on the size of the population following the boomers and slower-moving forces like lengthening lifespans. But think what this should mean for entitlement spending. As the population of seniors levels out in those later years, costs should naturally stabilize — at least, if demographics were really the driving factor. This is exactly what you see for Social Security. The CBO expects total Social Security spending to leap up over the next decade but then settle at just over 6 percent of the GDP, at which point it will cease to be a major contributor to rising entitlement spending or growing debts. Social Security is thus a minor player in our long-term budget drama; if you cut the program to the bone, shrinking future payouts so that they won’t add a penny to the deficit, the federal debt would still reach 111 percent of the GDP in 2047.4 Likewise, cuts to welfare and poverty-related entitlements like food stamps and unemployment insurance are unlikely to improve the debt forecast. In fact, spending on these entitlements has been dropping since the high-need years around the Great Recession and is expected to shrink further in the decades ahead — partly because payouts aren’t adjusted to keep up with economic growth, and partly because the birth rate has been falling and several programs are geared to families with children.5 But the scale of the problem is totally different when you turn to health care. Spending on entitlement-related health programs — including Medicare, Medicaid and subsidies required by the Affordable Care Act — will never shrink or stabilize, according to projections. The CBO predicts these costs will grow over 65 percent between now and 2047 — and then go right on growing after that, heedless of the fact that the percentage of the population that’s over 65 should no longer be increasing. Why is health care eating the budget? Per-person costs Demographics aren’t responsible for the projected explosion in health care costs. More important than the growing number of elderly Americans is the growing cost per patient — the rising expense of treating each individual The CBO found that the lion’s share — 60 percent — of the projected increase in health spending comes from costs that would continue to increase even if our population weren’t getting older. The reasons for this are many, including the rising cost of prescription drugs and the fact that hospital mergers have reduced competition. But since 2000, per capita health costs in the U.S. have, on average, grown faster than the GDP. And while these costs rose more slowly after the Great Recession and the implementation of the Affordable Care Act, analysis from the Centers for Medicare and Medicaid Services suggests this slower growth rate won’t last. Which is bad news for these programs, because if the problem were demographic, it’d be easier to solve. By mixing the kind of program cuts Republicans generally support with targeted tax increases favored by some Democrats, you could meet the short-term challenge posed by retiring baby boomers and raise enough money to cover the larger — but stabilizing — population of eligible seniors. But with ever-rising costs, there is no stable future to prepare for. To keep these programs funded, you’d need a wholly different approach — indeed a whole new perspective on mounting federal debt and the role of entitlements. The future is a race between rising health care costs and economic growth, a race that the economy is losing. Each time health costs outpace the GDP, it creates what the CBO calls “excess cost growth,” which feeds the federal debt. If the government could close this gap, the long-term budget outlook would be a lot rosier. There are two ways to solve this issue: Either contain health care costs — say through price regulation or more competitive markets — or boost economic growth enough to pay for this expensive health care. Success on either front would make health care spending look more manageable over future decades and lighten the debt load. Entitlement reform needs health care reform to work Few of the proposals that commonly fall under the heading of entitlement reform target the health care cost problem, which limits their ability to reduce the long-term debt. Even when they do address health care, often the result is to shift — rather than solve — the problem. Say lawmakers decide to dramatically cut Medicare. That would indeed ease the government’s debt problem. But the underlying dynamic — the race between health costs and the GDP — wouldn’t really change. Seniors would still need health care, and per-person costs would likely still grow (maybe even faster, since Medicare is a relatively efficient program). On top of all this, there’s also a deep-seated political barrier: It’s no good if one party picks its favored solution only to watch the other party dismantle it when they next take over. You need political consensus to make changes stick, and America is notably short on consensus right now. In the end, though, it won’t do to just throw up our hands. Absent some workable solution, spending on health care will sink the federal budget, generating levels of debt that would hold back the economy and potentially spark a global crisis of confidence in the United States’ ability to borrow.

Hazel and Sophia,11-14-2024, “PAYING THE PRICE: HOW DRUG MANUFACTURERS’ GREED IS MAKING HEALTH CARE LESS AFFORDABLE FOR ALL OF US” FamiliesUsa, https://familiesusa.org/resources/paying-the-price-how-drug-manufacturers-greed-is-making-health-care-less-affordable-for-all-of-us/

Families across America are facing a health care affordability crisis. In 2021, the United States spent $4.3 trillion on health care, two or three times more per person than other wealthy countries. Yet the U.S. still has some of the worst health outcomes and health care quality.1,2 Furthermore, high and rising health care costs force millions of people to choose between the health care they need and basic necessities.3 One-third of Americans say that the cost of medical care interferes with their ability to have food and housing.4 And, these high and rising costs drive more than 40% of adults into medical debt, further exacerbating their health and financial struggles.5 The high costs of prescription drugs are particularly egregious and play a big part in the affordability crisis. Over the past 15 years, launch prices — the initial prices of drugs set by manufacturers — grew more than 20% each year.6 In 2021 alone, the U.S. health care system spent $603 billion on prescription drugs (before rebates), and national prescription drug expenditures grew faster than spending on both hospital services, and physician and clinical services.7,8 Even after drugs launch, their prices continue to rise at irrationally high rates. For example, the price of Victoza (a popular diabetes and weight loss medication launched in 2010) increased a staggering 42% in just five years, rising from $7,936 per year in 2015 to $11,300 per year in 2020.9 The impact of these high prescription drug costs on individuals and families who rely on these medications is clear, with almost 30% of adults not taking their medications as prescribed in the past year — rationing their medications, skipping doses, or not filling their prescriptions at all.10,11,12 Being forced to make those decisions directly results in poorer health outcomes: rationing or skipping needed medication causes an estimated 125,000 deaths a year.13,14 What many Americans might not know is that not only do high and rising drug prices drive up health care costs for people at the pharmacy counter, but they also drive up health care premiums and deductibles and are often experienced in the form of reduced wages.15,16,17 For example, if a person with insurance from their employer is charged a very high price for a prescription drug, not only will those individuals receiving the drug have higher cost sharing, but also that high price will be factored in when establishing future premium costs for all employees insured in the employer’s insurance pool. This means we all end up paying the price for drug manufacturers’ greed, whether or not we take a prescription drug. For the 60% of U.S. adults currently taking at least one prescription drug and the 25% taking four or more, this means paying for prescription drugs multiple times, including through monthly premium payments, payments to reach their deductibles, and any out-of-pocket expenses paid at the pharmacy counter.18 Drug companies make the system work for them, not people who need care The entire business model of big drug companies is rooted in abusing their monopolistic or quasi-monopolistic position, including price gouging, protecting drug exclusivity through anticompetitive behavior, and increasing profits on old drugs rather than investing in new and innovative treatments to help our nation’s families.19 Simply put, it is a business model that is often rooted in greed. Just this year, a Stanford University business and medical school professor wrote in Forbes, “In the 21st century, most drug companies have replaced moonshots with chip shots: strategies aimed at minimizing risk. Rather than chasing the elusive game-changing drug, today’s biopharma giants focus on monetizing easy wins.”20 Drug companies game the prescription drug market and health care system from beginning to end. When drug companies file patents to bring new drugs to market, they can receive “exclusivity” on those drugs during which time no other company can market a competing drug.21,22 In general, under a series of federal laws, most prescription drugs receive between 12 to 16 years of exclusivity and patent protection to reward innovation, with the average being about 14.5 years.23 This length of time is in part the result of drug companies learning how to abuse this privilege, turning exclusivity and patent protections into a perverse incentive to maintain exclusivity as long as possible in order to maximize profits off old drugs without expending additional resources to develop new ones.24 Drug companies regularly deploy a barrage of tactics to extend their exclusivity periods, keep generics off the market, and maintain their market dominance.25 Common examples include blanketing one drug with multiple and overlapping patents to create a “patent thicket” and paying potential competitors not to produce a generic drug as part of a “pay-for-delay” scheme. In fact, the 10 top-selling drugs on the market today have been granted an average of 74 patents per drug, with an average of 140 patents filed for each of them.26 Importantly, 66% of those patent applications are filed after the drug is approved by the Food and Drug Administration.27 This means that drug manufacturers file new patents, looking to extend drug exclusivity periods, to protect against generic competition with no significant changes made to the original drug itself. Drug companies have an overwhelming financial interest in having market and patent exclusivity that has no relation to improvements to the medications or accessibility of the medications for patients.28,29 When Revlimid, a chemotherapy drug, had patent exclusivity, it brought in $23.8 million per day in revenue. When Keytruda, a cancer drug, had exclusivity it made $26.8 million per day in revenue. And before its first competition came onto the market in early 2023, Humira, an immunosuppressant drug treating arthritis and Crohn’s disease, made $47.5 million per day in revenue for its manufacturer.30 Finally, once they have established market dominance, drug companies can price gouge freely, raising prices year after year at shocking rates on the medications that they have long since released. These price increases are wholly unrelated to the effectiveness of a drug over time. One study of high-spend drugs showed that seven of the 10 drugs reviewed provided no additional clinical benefit relative to other available drugs to justify their high list price or price hikes.31 Some examples of price gouging are particularly predatory. For instance, the drug manufacturer Mylan faced and settled a series of class-action lawsuits resulting from its widely publicized price increases of more than 400% for the EpiPen.32 In another example, even though the FDA first approved the use of naloxone to treat opioid overdose in 1971, the company manufacturing the drug raised the price from $1 to $150 for a two-pack of nasal spray in the mid-2010’s and charged $4,500 for an auto-injected version of the drug — putting it out of reach for people who needed it.33,34,35 Since then, opioid overdose deaths in the U.S. continued to rise each year, reaching 80,411 deaths in 2021.36 Time and time again, drug companies demonstrate that it is easier and more profitable for them to abuse patent law, limit competition, and raise prices rather than investing in new, innovative treatments that will help people live longer, healthier lives.37 High drug costs do not stop at the pharmacy counter Most people think of high drug costs as a problem when they are filling a prescription. But that is only part of the story. As drug companies continue to price gouge and drug prices go up, consumers are stuck with the bill in more ways than one. That is because drug companies set the list price for their drugs long before they are purchased by the consumer. These underlying prices are paid by insurance providers who in turn pass those high and rising costs along to families and employers in the form of higher insurance premiums. The problem of costs being pushed onto the consumer is particularly pronounced for the 174 million people with employer-sponsored insurance (ESI), because the premium and deductible structure in these private plans are particularly vulnerable to drug pricing increases as compared to the more standardized structure of Medicare or Medicaid.38,39,40 The increased prices charged by drug companies for their drugs become part of the costs analyzed by actuaries to establish updated health insurance premiums, and those increased premiums accrue to all people within an insurance pool, regardless of whether those enrollees take prescription drugs. Put simply, when a drug company abusively increases its prices, the amount insurance companies pay increases, and insurance premiums increase right along with them, for everyone, whether or not they take prescription drugs.41,42 In fact, almost 20% of health insurance premiums are driven by the rising cost of prescription drugs.43 These premium increases result in a cascade of negative impacts on health care affordability for employers and workers alike. In the past decade, health insurance premiums for those with private insurance rose faster than the rate of inflation and workers’ wages.44 From 2012 to 2022, the average premium for family coverage rose 42%, from $15,745 a year to $22,463 a year, and the average premium for an individual rose 40%, from $5,615 a year to $7,911 a year.45 In 2022, health insurance accounted for almost 8% of employee compensation, second only to wages and salary.46 As monthly premiums increase, wages rise more slowly because increased health care costs cause employers to spend more of their annual budgets on employee health care and less on employees’ take home pay.47 This problem is especially concerning for individuals who are already paid low wages and are then forced to contribute a disproportionately high percentage of their wages toward health insurance premiums.48 On top of increased health insurance premiums, high drug prices result in other increased health insurance-related costs in the form of deductibles, coinsurance, and copays — for prescription drugs and other health services alike. With 50% of out-of-pocket spending on medical care (including prescription drugs) experienced through deductibles, increasing deductibles leaves consumers paying more out-ofpocket and exposes more consumers to the full price of their prescription drugs and other health care services.49,50 In 2019, a Consumer Reports survey revealed that 30% of adults who take a prescription drug regularly experienced out-of-pocket cost increases from one year to the next, and 12% said those costs went up by $100 or more.51 The average deductible for covered workers in 2022 was $1,763 for single coverage, and just one year later, in 2023, that average had grown to $2,004.52,53 Increases to deductibles and premiums affect all people with health insurance, regardless of what kinds of care they are seeking, and when taken in combination with the stagnating effect on wages, it is clear that high and rising drugs costs are compounding families’ financial insecurity.54,55

Alfred, 12-16-2020, "Unaffordable prescription drugs: the real legacy of the Hatch-Waxman Act," STAT, https://www.statnews.com/2020/12/16/unaffordable-prescription-drugs-real-legacy-hatch-waxman-act/

How is it possible to have a prescription drug price crisis when 90% of prescriptions are filled with generic drugs that cost, on average, $1 a day? The answer: The remaining 10% of prescriptions have an average cost of $20 a day and account for 80% of all prescription drug spending. High prices for branded medicines are one consequence of the Drug Price Competition and Patent Term Restoration Act of 1984, better known as the Hatch-Waxman Act, the same law that made low-cost generic drugs widely available. To pass that law, Congress yielded to demands from the powerful pharma lobby for longer and stronger monopolies for new drugs. This payoff to an already highly profitable industry has wiped out the savings that the widespread use of generic drugs should have produced. Policymakers need to understand the historical background leading to the enactment of Hatch-Waxman and the impact that extra monopolies have had on prescription drug prices over the last 36 years as they consider policy changes that will make medicines more affordable. It’s a history I know well, having been in the middle of the negotiations as counsel to the Generic Pharmaceutical Industry Association (GPIA), and having followed the impact of the act ever since. Before Hatch-Waxman In the pre-Hatch-Waxman era, the Food and Drug Administration’s generic drug approval process required independent proof that a new generic drug was safe and effective. The process was so costly that few generic medicines were approved, and most branded medicines enjoyed perpetual monopolies. Since 1970, FDA regulations have included an Abbreviated New Drug Application (ANDA) process for approving generic drugs that only required applicants to prove that a drug was chemically and biologically the same as a previously approved drug. But the abbreviated application could only be used for generic versions of drugs that had been approved before 1962, when the law only required proof that a drug was safe and did not require proof that it was effective. ADVERTISEMENT Manufacturers of brand-name drugs feared that their perpetual monopolies would come to an end if the ANDA was used to approve all generic drugs especially since the Federal Trade Commission had recommended that all states adopt laws mandating generic substitution on prescriptions written for branded medicines. To offset that possibility, they asked Congress for longer monopolies for new drugs. By 1979, legislation had been introduced to extend the life of pharmaceutical patents by up to seven years. The pharmaceutical industry argued that patents claiming a new drug were entitled to longer life to compensate for the time lost in obtaining FDA approval before a new drug could be sold. There was no legal basis for that claim. A patent does not create an affirmative right to sell a patented product at all let alone for the life of the patent. It only grants the right to exclude others from doing so. Whether a patented product is ever sold, for how long, and under what circumstances, is governed by a host of commercial factors including laws that protect the health and safety of consumers by limiting or barring the sale of dangerous products. In some industries, like electronics, the pace of innovation is so rapid that a patented product may be obsolete by the time a patent is granted. The winding road to Hatch-Waxman Nevertheless, in July 1981, the Senate unanimously passed a bill extending the length of drug patents by up to seven years and the House began hearings on similar legislation. In 1982, I provided the House Committee on Science and Technology’s Subcommittee on Investigations and Oversight chaired by Al Gore (D-Tenn.) with a detailed analysis of why longer pharmaceutical patents would be an unprecedented, expensive and unnecessary giveaway. Later than year I predicted in the journal Health Affairs that it “… would substantially increase prescription drug costs to consumers without any assurances whatever that any of the extra revenue derived would be reinvested in pharmaceutical R&D.” Despite such warnings, the House fell just two votes short of the 2/3 majority needed to bypass regular order and enact the Senate bill into law before it adjourned for the 1982 midterm elections. It was clear that longer drug monopolies would be the political price for permitting the abbreviated generic drug approval process. Henry Waxman a liberal Democrat from California, became chair of the House subcommittee on health in the new Congress. In January 1984, he brought leaders of the brand and generic industries together and hammered out an agreement in principle on a compromise in which the branded industry would get longer monopolies and the generic industry would get the abbreviated generic drug approval process. Critically, brand-name drug manufacturers also received guaranteed exclusivity for 10 years for new drugs launched in the two years preceding the compromise thereby assuring that the new law would not adversely impact their projected earnings. The legislative process leading to the enactment of Hatch-Waxman, in which I participated as counsel to GPIA, was essentially a congressionally supervised negotiation between the brand and generic drug industries in which each side fought for provisions that would ensure their own long-term profitability. Waxman supervised the initial phase of those negotiations which led to the introduction of an agreed-upon House bill. Conservative Republican Sen. Orrin Hatch of Utah became the sponsor of the Senate version of the House bill and forged the additional compromises required to save the legislation after several major brand name manufacturers sought to back out of their agreement to support the House bill. The Hatch-Waxman Act was lauded as a victory for consumers by its sponsors who claimed that it would simultaneously make access to medicines more affordable while enhancing the incentives to invest in biomedical research. That boast ignored the fact that in an unrigged free market, the public was entitled to the benefit of competition from lower cost generic drugs without regard to the existence of patents and without paying for that right by granting longer monopolies to brand name drugs. Initial benefits Consumers did initially benefit from the enactment of Hatch-Waxman. The ANDA process led to the rapid approval of a backlog of generic versions of older medicines which increased the use of generics and lowered the overall cost of prescription drugs for many patients. By 1990, about 40% of prescriptions were being filled with generic drugs at an average cost of only 35 cents a day versus a cost of about $1 a day for branded medicines. The enactment of Hatch-Waxman also happened to coincide with a golden era in scientific discoveries related to the physiological site of action of many chronic conditions. That led to the introduction of new medicines to treat high cholesterol, high blood pressure, diabetes, depression, and gastric reflux, to name a few. Between 1984 and 2009, sales of branded pharmaceuticals soared from $20 billion to $250 billion largely as a result of the introduction of blockbuster drugs such as Tenormin, Lipitor, Zantac, Nexium, and dozens more. Each of these blockbusters treated a chronic condition and were prescribed for millions of patients. These drugs were expensive, often costing more than $1,000 per patient per year, and per capita expenditures for prescription drugs significantly increased. But the increase was driven by increases in the annual number of prescriptions being dispensed — not by aggressive price increases. In 2006, the Medicare Part D prescription drug benefit went into effect and provided senior citizens with financial relief from the increased use and cost of prescription drugs to treat chronic conditions. In its early years, the government’s cost for Part D was surprisingly lower than expected because of increased use of low-cost generic drugs. That reinforced the belief that Hatch-Waxman had achieved a balance between encouraging innovation and making prescription medicines more affordable. Extending patent protection and price hikes Against this background, in 2010 a Democrat-controlled Congress extended the extra monopoly philosophy of Hatch-Waxman to biologic drugs by enacting the Biologics Price Competition and Innovation Act (BPCIA) as part of the Affordable Care Act. It established a pathway for approving generic biologic (biosimilar) drugs while giving branded manufacturers 12 years of guaranteed market exclusivity, even if no patents existed and by creating the so-called “patent dance” which allowed patent owners to delay competition by asserting claims of potential patent infringement without regard to their merit. A generation of rapid revenue growth for branded pharmaceuticals began to subside beginning around 2009 as a result of what was known as the patent cliff. Between 2009 and 2017, patent expirations on blockbuster drugs resulted in the loss of $185 billion of brand-name sales to low-cost generic competition. It was not possible for pharmaceutical manufacturers to replace that revenue by introducing new medicines, because most new medicines were specialty drugs that were useful for relatively small patient populations, compared to the millions of people being treated with each blockbuster drug. Although these specialty drugs were often launched at prices that were 10 times or more than the price of the old blockbuster drugs, they produced less revenue. The increased use of generic drugs because of the patent cliff should have resulted in a significant drop in total consumer and government spending on prescription medicines. It did not. To make up the lost revenue from patent expirations, manufacturers of branded drugs aggressively increased the prices of their remaining drug monopolies, often more than once a year and by as much as 10% or more annually. The industry’s revenue growth from yearly price increases between 2009 and 2013 was far greater than the revenues from new product introductions. That ceased to be true thereafter only because of the introduction of the hepatitis C drug, Solvaldi, at the staggering price of $89,000/patient. But for the period 2008-17, the IQVIA annual reports on pharmaceutical sales show cumulative price increases totaling $187 billion. In short, the loss of revenues resulting from patent expirations was completely offset by price increases. Branded drug manufacturers also aggressively sought to make their monopolies longer. They exploited loopholes in Hatch-Waxman such as paying to delay generic competition and denying access to samples required to make legitimate generic copies. They also exploited flaws in the patent laws by creating patent thickets — the practice of acquiring additional patents of dubious merit claiming minor aspects of conventional drug formulation and manufacturing that are used to delay competition after the basic patent claiming a new drug expires. Published economic data shows the shocking extent to which price gouging rather than innovation has driven pharmaceutical revenues over the last decade. Between 2010 and 2018, the percentage of prescriptions filled with a generic drug rose from 77% to 90% and the number of prescriptions filled with a branded medicine dropped by more than 50%, from 910 scrips to 425 million. Nevertheless, revenues for invoiced sales of branded prescriptions rose by 60% and produced $140 billion in revenue growth. As a result of high launch prices and aggressive price increases, spending on the 20 largest selling branded drugs in 2018 was greater than the total sales of all generic drugs: $109 billion versus $103 billion. Five of the 12 largest-selling branded drugs have already enjoyed at least 20 years of monopoly protection and three others have enjoyed 15 years or more. Between 2012 and 2017, four of those drugs had cumulative price increases of more than 100%: Lyrica, 166%; Enbrel, 155%; Humira, 144%; and Lantus, 114%. If Medicare Part D had limited price increases to the rate of inflation instead of prohibiting the government from negotiating drug prices, annual expenditures on branded prescription drugs would be at least $100 billion lower today. Instead, brand-name manufacturers have so perverted the intent of Hatch-Waxman that the savings generated by the greater use of low-cost generic drugs each year have been offset by price increases on branded medicines. The true legacy of Hatch-Waxman Higher drug prices and less innovation is the true legacy of Hatch-Waxman, the Biologics Price Competition and Innovation Act, and other such laws enacted over the last 40 years which put extraordinary monopoly power in the hands of pharmaceutical manufacturers. As I predicted in 1982, experience has proven that longer monopolies produce higher dug prices but do not guarantee greater investment in innovation. The claim that Hatch-Waxman was a victory for consumers is demolished by the fact that low-cost generic drugs now fill 90% of all prescriptions in the U.S. but U.S. citizens still spend two to three times as much per capita on prescription drugs as the citizens of other developed countries. Why? Because no other developed nation allows pharmaceutical manufacturers to abuse their monopoly power by price gouging. The reality is that the extraordinary monopoly power granted to pharmaceutical manufacturers in the U.S. has allowed them to grow their revenues and profits by raising prices to offset their loss of market share to generic competition rather than by innovating. In fact, the government’s own study shows that the large pharmaceutical companies no longer engage in basic biomedical research to discover new drugs but instead rely on academic medical centers that are supported by government grants. I believe that repealing these special monopolies for new drugs is in the best interest of the American people. The pharmaceutical industry is not entitled to any greater patent or other monopoly rights than the Constitution provides to any other industry. Eliminating the special monopoly privileges for pharmaceuticals will shorten their monopolies, limit the industry’s ability to generate revenues from price increases, and make the industry’s profits more dependent on innovation. In addition to eliminating extra monopolies granted by the government, changes are needed to both the patent laws and the FDA new drug approval process to ensure that generic competition begins on the day the patent claiming a new drug expires. There are at least three ways to reduce or eliminate the patent thickets that allow monopolies to last longer than that. First, fix a broken patent system that grants drug manufacturers dozens of additional patents for minor changes because patent examiners lack the tools or experience required to understand that these changes do not meet the requirements for a valid patent. To do that, the Patent Office procedures which allow competitors to challenge the issuance of such patents must be strengthened and the presumption that a patent is valid simply because it was granted must be repealed. Second, the FDA must preserve the ability of generic manufacturers to copy a new drug, as originally approved. Drug makers often supplement their original submission to make minor changes to an approved drug that have no significant effect on either its safety or efficacy but serve to bring the drug under the protective umbrella of the patent thicket. FDA regulations should be modified to prevent non-essential changes to a drug that serve to delay generic competition. Third, the patent law should be amended to prevent courts from granting injunctions for infringement of patents claiming minor changes to a drug after the patents claiming the drug itself or its medical use have expired. The Supreme Court has held that an injunction for patent infringement is discretionary and should not be granted when it would do a disservice to the public interest. Congress can make a legislative determination that it is not in the public interest to enjoin generic competition after the patent claiming a new drug or its medical use expires — at least in those instances where an injunction is sought due to the existence of a secondary patent claiming subject matter that is not material to the safety or efficacy of a drug as originally approved.

Before rushing to kit out your climate prepper bunker, you might want to take a look at the new study by University of Colorado climate change policy researcher Roger Pielke that confirms what the Intergovernmental Panel on Climate Change found in August 2021, namely that the worst-case climate scenario is increasingly unlikely, and that while our future will be warmer, it will not be catastrophically so.

These dire predictions were based on calculations derived from a scenario of the future in which fossil fuel and agricultural emissions over the course of this century would boost atmospheric carbon dioxide to nearly 1,400 parts per million (ppm) by 2100. The current level of atmospheric carbon dioxide is just under 420 ppm, and that is up from the pre-industrial level of about 280 ppm. Largely as a result of this increase in atmospheric concentrations of greenhouse gases, global average temperature has risen to around 1.1°C above the pre-industrial level.

Christopher M., 6-1-18, "Patentability Standards for Follow-On Pharmaceutical Innovation," Biotechnology Law Report, https://www.liebertpub.com/doi/10.1089/blr.2018.29073.cmh

It is generally recognized that most pharmaceutical innovation depends uniquely and critically upon the availability of effective patent protection. Even economists such as Bessen and Meurer, who are otherwise skeptical that benefits outweigh the costs of the patent system, explicitly acknowledge that pharmaceutical innovation is a special case where the benefits of patent protection likely outweigh the costs. The underlying basis for the particular importance of patents to pharmaceuticals is, in addition to the expense and riskiness that comes with developing new drugs in the laboratory, the extremely high cost and length of time involved in subsequently bringing that nascent drug out of the laboratory and transforming it into a safe, effective, and well-characterized human therapeutic. Even then, the innovator must conduct the extensive human clinical trials required to achieve marketing approval from a regulatory authority (e.g., the U.S. Food and Drug Administration [FDA] and its European counterpart, the European Medicines Agency [EMA]). Patents on pharmaceuticals are also particularly important due to the relative ease with which, in the absence of patent protection or some other form of exclusivity, a generic competitor can bring a bioequivalent product to market once the innovator has secured regulatory approval and established a demand for the product.

Kevin McLintock; "In Defense of Patents: Retaining value and relevance of patents in periods of rapid innovation"; IPWatchdog; 9-7-2016; https://www.ipwatchdog.com/2016/09/07/defense-patents-periods-rapid-innovation/id=72667/

Innovation, whether in the technical or biological fields, occurs at a pace today that likely exceeds any period in history. This is due in part to the modern tools available that promote innovation. Equipment that was once available only to universities or billion dollar corporations, now sits on the desks of small startup companies and hobbyists. Consider: only a few years ago it cost tens of thousands of dollars and took months of work to produce a medical prosthetic limb. Today, researchers are using consumer grade 3D printers to create replacement jaw-bones in a matter of weeks. In an environment of such rapid innovation, it is no wonder that some question whether patents are still valuable or relevant given the slow, bureaucratic and expensive process require to obtain them.

Translating this generous grant to the environmental sphere would provide the same incentive to environmental engineers to tackle the growing number of environmental issues facing humanity. The legislative intent behind the Patent Term Restoration Act was sufficiently tailored to meet the government's ends in that it aimed to improve healthcare and increase innovation.1 46 This same legislative intent must be applied to the environmental sector of innovation.

Aside from directly benefiting patent holders, new inventions can improve quality of life, stimulate economies, promote high rates of entrepreneurship, create career opportunities for skilled labor, and protect and preserve natural resources.1 47 With many minds working on many problems at once, each diverse issue attracts critical problem solving through inventions. One could see the number of lives saved by introducing new drugs via the Patent Term Restoration Act as minuscule compared to the future generations saved by improvements in the air, water, and land quality worldwide.1 48

Julien & Daniel, 2018, "Patents and Open Innovation: Bad Fences Do Not Make Good Neighbors," Cairn.info, https://www.cairn.info/revue-journal-of-innovation-economics-2018-1-page-57.htm

Open innovation is a relatively new term depicting an older reality. Innovation is an interactive process, as innovators are no longer isolated and self-reliant, but collaborate with upstream and downstream actors to benefit from increasingly complex knowledge flows (Chesbrough, 2003). The functioning of open innovation can take various forms, from in- and out-licensing, spin-ins and spin-outs, co-conception and co-development, research joint ventures, to crowdsourcing, community innovation and online market places. The main link between these forms is that open innovation entails flows of knowledge between different actors, and on both sides of the market (Chesbrough, Euchner, 2011). The literature distinguishes three faces of open innovation according to the different possible direction of the knowledge flows: i) “outside-in”, when a firm absorbs knowledge coming from outside (for example when a firm relies on crowdsourcing); ii) “inside-out” when a firm releases to others knowledge that it has developed internally (for example when it grants a patent license to another firm), and “coupled” when knowledge flows both from inside to outside, and from outside to inside (such as in an inter-firm partnership, for example). Consequently, opening up the innovation process brings risks, the importance of which depends first and foremost on the direction of knowledge flows, but also on the actors involved and the type of knowledge exchanged.