Current patent exclusivity and challenges on entry PREVENT cheaper drugs from hitting the market and encourage price gouging

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.