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« Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. 2016) | Main | Hudson Institute Report Refutes UN Panel Stance on Impact of Patents on Access to Medicines »

August 02, 2016

Comments

In June projects next year's medical cost trend to be 6.5% which is level to the medical cost trend for 2016, comparable to the medical cost trend for the past three years. The projected increase in the medical cost trend for 2017 will be due to increases in access to care. The significance to the pharmaceutical and life sciences industry the report states that drug spending is still a relatively small portion of health spending.
Original industrial biotechnological research for discovery of new biodrugs and manufacturing of the proprietary medicines may be the lowest of the cost trend and will be better for the pharmacists and hospitals and affordable for the patients. The lowest cost trend for innovation and manufacturing of new biodrugs facilitates the pricing strategies of the pharmacists and hospitals leading to affordable health care.

The risk-aversion of the public in relation to new drugs and the high costs of testing to meet regulatory requirements places extreme pressure on those seeking to develop new medicaments and other life science products.

Howard Florey and Ernst Chain, searching for potential antibiotics at Oxford University in 1940, used a mouse protection test to investigate the properties of penicillin. In the test, Florey and Chain injected eight mice with a lethal suspension of bacteria, and four of these were also given penicillin. The four mice which received penicillin lived and the rest died, indicating that penicillin could be effective against serious bacterial infections. The effectiveness of penicillin was recognised without a huge and elaborate trial followed by painstaking statistical analysis. In early 1941 penicillin was given at the Radcliffe Infirmary to a policeman called Charles Fletcher whose bacterial infection was greatly ameliorated within 24 hours, although he later relapsed and died. Of the next seriously ill patients, four made recoveries thanks to penicillin.

What chance would there be nowadays of conducting a similar experiment almost immediately after discovery of the effectiveness of a new medicament? Anyone in the bioscience industry would tell you almost nil, notwithstanding the potentially life-saving quality of the new medicament. Nowadays a medicament has to run the gauntlet of the Phase I, Phase II and Phase III trials and to present the results to slow-moving bureaucratic bodies before it can be prescribed for humans.

The reasons for careful testing and proportionate regulatory procedures are well-known and not in serious dispute. But especially in the case of third world countries and orphan diseases, it would not be inappropriate to consider whether their elaboration, which delays the introduction of new drugs for years if not decades, is always in the public interest.

Irrespective of such considerations, inventors following in the footsteps of Florey and Chain now find themselves in a situation known in economics as the "tragedy of the commons". If the new medicament is made available to everyone as penicillin initially was, then nobody will incur the cost of developing it and obtaining regulatory approval because all profit and even recovery of research costs would be nullified by unlicensed competition. It will be recalled that Sequenom was in that position with regard to its ante-natal tests as documented in the amicus brief filed by the Chartered Institute of Patent Attorneys in support of a petition to the Supreme Court for certiorari. That brief explains that bringing the invention to market as a viable medical test, clinically validating it and obtaining regulatory approvals cost Sequenom some $70 million, and price and market erosion from Ariosa’s competition had prevented recovery of this investment. Innovation in new pharmaceutical and other life sciences products is now practical almost exclusively as a result of patent protection and other allied rights such as data exclusivity.

The sad fact is that life science innovation is very expensive and has to be paid for. And eventually the exclusivity expires and the product becomes a generic, freely and inexpensively available to all.

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