Gasping in an airless system

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Russell Saunders

Russell Saunders is the ridiculously flimsy pseudonym of a pediatrician in New England. He has a husband, three sons, daughter, cat and dog, though not in that order. He enjoys reading, running and cooking. He can be contacted at blindeddoc using his Gmail account. Twitter types can follow him @russellsaunder1.

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166 Responses

  1. Avatar North says:

    Horrifying, very clearly patent reform is needed at the very least.Report

  2. Avatar Jason Kuznicki says:

    Asthma patient here. I’m not sure I follow you.

    You complain (correctly) about albuterol inhalers being unavailable. But then your quote is mostly about Advair, which is a different drug regimen entirely – not the same active components, not used in the same manner. Of course I’m sure you know this, but it is a bit confusing.

    Albuterol inhalers aren’t available because they failed to get an exemption from the rules on atmospheric release of CFCs. My understanding is that albuterol got repatented in conjunction with a non-CFC propellant in the new inhalers. (Which, by the way, is crap and doesn’t work nearly as well as the old stuff.)

    Advair is expensive because it’s still on its original patent, and I shamelessly buy it from overseas. When I do, I never need albuterol, which is good for the reasons I’ve just mentioned – currently albuterol is both expensive and less effective than it used to be.

    I’m even a bit worried that this comment will get flagged as spam if I name names here…. but such firms are, sadly, what we get when we combine FDA, patents, insurance, and all the rest in our current healthcare system.Report

  3. Avatar Damon says:

    Russell,

    I can’t believe that you’re worried about a few children when the fate of THE WORLD free of toxic chlorofluorocarbons is the obvious best end result. The gov’t is just making it safe for everyone. /sarchasm off.

    Now, really, this is a perfect example of the rule of unintended consecquences-gov’t regulation of chlorofluorocarbons and patents. I’m sure there are plenty of other examples.Report

  4. Avatar Jim Heffman says:

    Wow, just wow.

    The government banned CFCs and manufacturers had to develop new propellant gases? Fuckin’ capitalism, man!Report

    • As is often the case with your contributions to our discussions around here, I am having trouble understanding the precise point your comment means to convey. Illuminate me, please.Report

      • Avatar Brandon Berg in reply to Russell Saunders says:

        His point, I believe—and the point I was going to make, in any case—is that it’s inappropriate to blame the people who solved the problem rather than the government that created it.Report

      • I think this is one of those gut-check rorshach issues. Where if you look at this and your thoughts immediately go to the government’s culpability, you lean in one direction more generally. If your thoughts go to the pharmaceutical companies’ role in this, you lean in the other. Which holds even if you acknowledge blame-sharing. Which I do, though I will confess my first thought went to the government.Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        Nobody’s blaming anyone. Nobody had a clue how chlorofluorocarbons degraded ozone in the upper atmosphere — until the evidence started showing up. CFCs were thought to be safe. Humans not only can ingest them, you can be submerged in oxygenated perfluorocarbon fluid, fill your lungs with them and liquid breathe. They’re wonderful molecules, the fluorocarbons. They’re also potent greenhouse gases. They go on destroying ozone for centuries.

        Heffman really is a marvel. How can a man be so consistently wrong — for so long? Doesn’t fact budge his argument, even a little? CFCs have unintended side effects so we found substitutes. It’s not “fucking capitalism”. It’s fucking science, where new evidence forces us to accept new conclusions.Report

      • Avatar Brandon Berg in reply to Russell Saunders says:

        Will:
        I’m kind of in the middle on this. It was unreasonable of the government to ban CFC-powered inhalers. This is exactly the kind of thing which should be exempted from the ban, especially since many patients claim that the new delivery systems aren’t as effective. The government created a problem here, and pharma solved it, at considerable expense.

        On the other hand, this doesn’t really deserve the same level of patent protection as a wholly new drug. As you point out, this was a pretty sure bet, since they were just testing a new delivery system and already knew the drug worked. Arguably this is a problem with the patent system, but it’s an understandable problem—how often does this kind of thing come up?—and it’s not clear that trying to engineer the patent system to solve this particular problem wouldn’t create other unintended consequences. It does seem kind of sleazy to exploit this, but really, what do you expect? It doesn’t really seem reasonable to expect them to leave those profits lying on the table.Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        BlaiseP, you aren’t actually responding to my post. I think maybe you need to read it again. Pay careful attention to how I don’t say “CFCs are no problem and the government shouldn’t have banned them”.Report

  5. Avatar Francis says:

    Patent lawyer here. It’s not the job of the PTO to regulate CFCs; that’s the EPA. The only question the PTO may legally ask is whether a product is “new and useful”. The “useful” test is largely meaningless, so the only question is whether the new combination of drug and propellant is new. Since it was, the patent properly issued.

    Should the EPA have granted / still grant a waiver allowing the old propellant to be used until the patent expires on the new combination? It’s quite possibly not within the scope of EPA’s jurisdiction to consider the cost to the consumer from the re-patenting. So if it tried to grant the waiver, it may well have lost in court. (I used to do environmental law so I know where to look, but I don’t have the time today to research EPA’s waiver powers.)Report

    • I obviously do not have the professional expertise to weigh in on whether or not a patent for that particular product was properly issued. I defer to your opinion on that matter.

      However, I happen to think that, new patent or no, the manufacturer should not be given license to subsequently quintuple the price. If someone can explain to me how that isn’t flagrant price gouging, I’m all ears.Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        “If someone can explain to me how that isn’t flagrant price gouging, I’m all ears.”

        Yeah, they had to pay the investors who bankrolled the FDA testing required for a new pharmaceutical. As far as the FDA is concerned, inhalers with non-CFC propellant are a wholly new drug which must be tested and approved entirely anew, and in a post-Vioxx world that is unbelievably expensive. So expensive that no one organization could afford to do it, unless you get up into Pfizer territory, and they’ll charge even more money for it.Report

      • I do not buy the argument that GlaxoSmithKline lacks the resources to fund its own FDA-compliance studies for their HFA product.Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        Addressed by my last sentence. Whether the process funded in-house or funded by investors, it’s still expensive, and the reason for that expense is compliance.Report

      • Does that justify some increase in price? Perhaps.

        Does that justify increasing it by a factor of five? As of July, Merck (maker of Proventil, one of the re-patented albuterol MDIs) was projected to have revenues to 2013 of over $45 billion. You do not believe somewhere in that total were sufficient funds to cover the FDA approval process without making their medication prohibitively expensive for a great many people who need them?Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        “Does that justify increasing it by a factor of five?”

        I don’t know anything about how you price your services, and if I claimed that one of them seemed too expensive–like, all you did was look at the thing for a minute, then poke it with a pin and wipe the hole with peroxide, and it hurt like hell, and you charged me eighty bucks!–you’d quite justifiably tell me to go piss up a rope.

        “As of July, Merck (maker of Proventil, one of the re-patented albuterol MDIs) was projected to have revenues to 2013 of over $45 billion.”

        Merck’s return on sales in 2011 was about thirteen percent. If they took all of that profit margin out of their inhalers, they would cost three-and-a-half times as much instead of four times as much. Not exactly getting back to the generic price.

        “You do not believe somewhere in that total were sufficient funds to cover the FDA approval process without making their medication prohibitively expensive for a great many people who need them?”

        Yes.

        Have you ever been involved in clinical trial development and funding?Report

      • Avatar Gaelen in reply to Russell Saunders says:

        Seconding Russell. Once the new monopoly is established, the price is set not through a calculation designed to recoup on investment in R&D, but through what the company is able to charge. Which in the case of life sustaining drugs (as opposed to monkey saddles) could be quite a bit higher than there initial investment.Report

      • It’s hard to know how much of a price increase is justified without knowing how much they had to spend on R&D and compliance.

        My guess is that it’s not justified because many of the factors that *do* justify high prices don’t apply here. No “awareness” (marketing) expenses are required because while it’s a new product, it’s a new product for something that isn’t available anymore. This is also a relatively risk-free investment. One of the reasons that pharmaceutical companies get paydays on new drugs is that for every one that makes it to market, there are five that don’t that they eat all of the expenses on. The market for this was pretty bankable.

        It seems straightforward to me that even though the drug companies were put in a spot, having to come up with something because they couldn’t sell their previous product anymore, they took advantage of the opportunity to make lots and lots of money on a relatively low-risk investment and with the possible assistance of patent laws that really work in their favor. (I say “possible” because I don’t know precisely what their patent here is.)Report

      • Avatar Kim in reply to Russell Saunders says:

        Will,
        so pull the financial records, if you dont’ know/Report

      • @jim-heffman I do not have access to Merck or GSK’s profit and loss statements, so I can’t speak with authority I don’t know how much they spent on the clinical trials for the HFA products, and I do recognize that such trials can be enormously expensive.

        However:

        1) I am skeptical that the trials for those particular drugs were sufficiently expensive to justify that kind of price hike, given that the actual medication contained therein has had FDA approval for ages.

        2) Even granting (which I don’t) that the trials for these medications approached the $1 billion tally it now costs to bring (from scratch) a new medication to market, companies such as GSK and Merck still have billions remaining to dedicate to their advertising budgets. There is, to me, a fundamental problem with maintaining an ad budget at that level if it means raising prices on life-saving medications to a prohibitive level.Report

      • If I remember correctly, the HFA products were somewhat fast tracked through the process. They did have to run clinical trials in both children and adults to compare their efficacy to that of the old CFC inhalers, but I don’t think they had to go through the beginning-to-end process. It was probably expensive, but not as expensive as developing a new medicine from scratch.Report

      • Avatar Brandon Berg in reply to Russell Saunders says:

        Russell:
        As of July, Merck (maker of Proventil, one of the re-patented albuterol MDIs) was projected to have revenues to 2013 of over $45 billion. You do not believe somewhere in that total were sufficient funds to cover the FDA approval process without making their medication prohibitively expensive for a great many people who need them?

        I’m not sure I follow. Are you saying that they should eat a loss on the FDA testing, as a matter of charity, just because they have a lot of money? I get that this particular case is somewhat problematic because there wasn’t much risk involved, but the actual argument you seem to be making doesn’t make a lot of sense.Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        “I do not have access to Merck or GSK’s profit and loss statements, so I can’t speak with authority”

        They’re a matter of public record via the company’s stockholder statements. I found the information on Google with no trouble.

        “I am skeptical that the trials for those particular drugs were sufficiently expensive to justify that kind of price hike, given that the actual medication contained therein has had FDA approval for ages.”

        So, no, not familiar with clinical trial management.Report

      • Avatar Patrick in reply to Russell Saunders says:

        So, no, not familiar with clinical trial management.

        I’m passing familiar, my wife worked in clinical trials for a decade. I’m aware both of some of the worst-case scenarios that represent government barrier-making at its most ridiculous, and the worst-case scenarios that represent government barrier-removing at its most corporate-friendly, and some of them in-between.

        Your contention that the price hike is due to costs is plausible, Jim. The good doctor may be irritated more than he ought to be by the NYT article bringing in things like pay-for-delay, that may or may not actually be related to the price of inhalers, specifically.

        However, clinical trials for a drug that is already passed FDA approval, using an inhaler design that has already passed FDA approval, and simply changed propellant would need to demonstrate two things: one, that the propellant was safe to use in an inhaler; and two, that it effectively delivered the medication.

        Without knowing more about the particular propellant, its status on the market at the time it was adopted, who developed it, whether or not its development was driven by asthma or if it was already in an FDA approval process for some other medication, and both the cost of the clinical trial for this specific use (and whether or not it was even required by the FDA)… your objection amounts to, “Well, Doc, you might be wrong! So there!”

        Which is hardly interesting.

        You spend a lot of time blasting other people for failing to convince you that they’re adequately researched a contention, but, you know, the right way to do that is to provide some sort of evidence that challenges their contention.Report

      • Avatar Patrick in reply to Russell Saunders says:

        The original article even gives a nod to what Jim is talking about… although the conclusion is that it’s not the FDA that’s necessarily the bottleneck:

        “The F.D.A. acknowledges that the lack of inhaled generic medicines, as well as topical creams, has been costly for patients, but it attributes that to “difficult, longstanding scientific challenges,” since measuring drug activity deep into the lung is complicated, said Sandy Walsh, a spokeswoman for the agency. Dr. Robert Lionberger, the agency’s acting deputy director in the office of generic drugs, said that research into the development of generic inhaled medicines was the agency’s highest priority but that the effort had been stalled because of budget cuts imposed by Congress. “Report

      • @jim-heffman Such a charming, charming man you constantly prove yourself to be. I lament every time we chat that I don’t have the pleasure of your company in real life. I’m sure you’re an absolute treat.

        I didn’t say I couldn’t get the profit and loss statements. I said I wasn’t familiar with them. If you found information that definitively cements your case, please share it in detail that I may lament my ignorance.

        And while I have not actively participated in designing a clinical trial, I know the process quite well. I have already linked to an academic report all about the burgeoning costs of bringing a new drug to market. However, even if (as I have already said) developing HFA inhalers cost upward of a billion dollars (and, again, please do link directly to your source that delineates how costly those particular trials were), there are ways of mitigating the expense for patients.

        I note that you made no mention of the ad budgets.Report

      • HFA has been used in MDIs since 1995.

        That linked article does mention that pharmaceutical companies have spent over $1 billion making the CFC to HFA transition. However, since many different companies make the various inhalers, it is not clear how much of that cost each individual company bore.Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        “Such a charming, charming man you constantly prove yourself to be. I lament every time we chat that I don’t have the pleasure of your company in real life. I’m sure you’re an absolute treat.”

        Hey cool, do I now get to say that I won the argument because you used a snarky tone? Because that seems to be how this website rolls.

        “I didn’t say I couldn’t get the profit and loss statements. I said I wasn’t familiar with them.”

        And it’s not my job to educate a man who has an M.D. and can presumably read words. I told you that I found the information with a cursory Google search, and if you honestly feel that me not writing a master’s thesis on the subject in your comments section means you won an argument, then good on you, boy, I guess you done found a way to win through laziness.

        “However, even if (as I have already said) developing HFA inhalers cost upward of a billion dollars (and, again, please do link directly to your source that delineates how costly those particular trials were)”

        See, that’s interesting, because you’re the one making the claim that the cost of these inhalers can’t be justified, which would seem to imply that you’re the one responsible for bringing in numbers to prove your point, and thus far all we’ve got from you is “they cost more! AND THAT IS WRONG. Discussion. Over.

        “I note that you made no mention of the ad budgets.”

        That’s because they’re irrelevant to the cost of clinical trials, and you’re bringing them in as a morality-based shaming argument, which has more to do with social norms than anything else, and I think that a member of a same-sex partnership would be more leery about the legitimacy of morality-based shaming arguments.Report

      • @jim-heffman I’ll be done with you after this.

        I’m not particularly interested in trying to determine who started with the snark first. Perhaps it seems obvious that it wasn’t me in my opinion.

        The thesis of my post is that hiking the price of a life-saving medication, cheaply manufactured, by a factor of three to five plus times is immoral. Your counter-argument is that they’re simply trying to recoup costs incurred during clinical trials for the “new” medication. I reply that I do not think it is plausible that they incurred significant enough costs in clinical trials for a medication that has enjoyed FDA approval for decades coupled with a propellant that had been in use in inhalers for more than a decade before CFCs were phased out. You aver that it is, and gesture toward publicly-available numbers as some phantom proof of your point.

        I have, for my part, provided numerous links in my comments to shore up my argument. You have not. You say that the information is easy to find and parse. I am skeptical that one can easily access GSK’s profit and loss balances and find the lines for developing Flovent HFA. If I am wrong, please do gleefully direct me to proof thereof.

        As far as another commenter’s question goes about whether these manufacturers should just, out of the goodness of their hearts, not pass the costs of developing the new HFA formulations onto their customers. I happen to think there are other, much less morally problematic solutions, even granting the dubious proposition that they each had to foot the $1 billion cost it typically takes to bring a new drug onto market. There are preferential formulary agreements that they could negotiate with insurance companies to steer subscribers toward their inhalers. GSK could, say, increase the price point on a relative luxury item like Pronamel or some other of its myriad products to keep the price of a necessary medication affordable for people who need it. Or, hell… maybe they could amortize the cost by lowering their monstrous ad budgets a small percentage over the next few years.

        Why? Because providing life-saving medications at affordable prices is actually the right thing to do.

        And all of that is to say nothing of the information Kevin Drum provided when he so nicely linked to my piece earlier today, in which he offers compelling evidence that Big Pharma actually lobbied for the CFC ban to apply to their inhalers precisely so they could exploit the change to patent the new inhalers and drastically increase the price, just exactly like they’ve done.

        As Patrick said, Jim, your entire argument is “you might be wrong about this.” Prove it.Report

      • Avatar Jim Heffman in reply to Russell Saunders says:

        I look forward to your angry ranting at BlaiseP, who said the same thing I did.

        But hey, I’m sure you’re not interested in stupid numbers and stuff, because you clearly go mostly on bellyfeel.Report

      • @jim-heffman Until you actually provide these wonderful numbers, spare me the aspersions. Sales for Proair and Flovent have each been in the $1 billion range for the past several years, more than sufficient to cover these phantom costs you keep saying justify an egregious hike in the price. I have gone to the trouble of providing numbers, of which you claim I care nothing and of which you have bothered to provide none of your own.

        You offer only snideness and a patina of ersatz know-how. Save it for someone who finds you impressive, unless you actually have something of substance to share.Report

      • For what it’s worth, the average cost of clinical trials looks to be about $90-$100 million – the average drug nowadays requires about 2000 patients in trials, and a drug that undergoes four phases of trials averages costs of roughly $46,000 per patient.

        I’d wager that the costs of clinical trials for these drugs were substantially less than average since both the device and the active agent were approved long ago. Regardless, even if they’re at the average, they’re not remotely enough to warrant this kind of a price increase. What I don’t understand is why an entirely new patent is justified here, though I don’t pretend to know much about patent law.

        Source: http://www.ciscrp.org/patient/facts_graphs.htmlReport

      • What I don’t understand is why an entirely new patent is justified here, though I don’t pretend to know much about patent law.

        Makes sense to me. New delivery system means a new patent. I’d expect as much.Report

      • My point is more that the delivery system, to my knowledge, was already patented separately. So I don’t understand why combining two patented items so easily results in a new patent.Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        @mark-thompson : the guiding case is TeleflexReport

      • Thanks, Blaise, although that makes me even more confused as to why this would warrant a new patent, since Teleflex seems to suggest that a new patent would be improper in this case.Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        @mark-thompson : ’tis a puzzlement to me, too, Mark. It’s nonsense, to take three already-patented technologies, a drug, a propellant and a dispenser — and call the combination original art. Defies logic. But that’s why I’m an Open Source kinda guy. Software patents are even more absurd.Report

  6. Avatar Glyph says:

    Is there any way to legally separate drug delivery systems (that is, the canister/propellant) from the drug itself, for purposes of FDA regulation and patent, since I don’t recall the price of WD-40 or Cheez-In-A-Can spiraling out of control when CFCs were banned?

    Maybe not…delivery system can have a pretty big impact on the drug’s efficacy…Report

    • The difference, of course, is that people can live without WD-40 or spray ersatz cheese. So manufacturers are smart enough to keep prices reasonable in order to people to remain willing to buy their products.

      Since there are no alternatives whatsoever on the market to the HFA inhalers (other than carting around a nebulizer and a portable power supply), manufacturers can hoist the prices into the stratosphere knowing that customers have no alternatives to paying them.Report

      • Avatar Glyph in reply to Russell Saunders says:

        I can see that. But if I understand correctly, the fact that allowed them to renew the patent was that the delivery system is considered part of the “drug” – at least theoretically, if the drug itself can be manufactured as a generic, and a spray can can be sourced from any company that makes spray cans, what stops some enterprising company from buying/making the two elements individually, combining them, and selling them at much lower cost than the current patent-enabled monopoly holders?Report

      • @glyph As I note elsewhere, I’m not patent lawyer. But, absent this enterprising other company creating some totally different propellant, my understand is that the patent covers albuterol + HFA. Any combination of those two ingredients marketed by a manufacturer of generics would, if I understand correctly, infringe on the patent.Report

      • Avatar Glyph in reply to Russell Saunders says:

        Brief inquiry indicates that HFAs are pretty much ONLY used in the inhalers; for non-medical aerosol applications, different propellants are used.

        Whether there is a medical basis for this, or it was done specifically to allow patent protection, I do not know.

        They should’ve just used nitrous oxide, but that might lead to problems of its own…Report

      • That would certainly solve many of the issues I have with patient compliance.Report

      • Avatar Glyph in reply to Russell Saunders says:

        We can’t keep these new inhalers on the shelf!Report

    • Avatar Will Truman in reply to Glyph says:

      Back when the ban was first announced, I was left with the impression that it was going to require more than a formula change (de-CDCing). Until someone can show me otherwise, that’s sort of the impression that I have.

      Which I think is what some of the pushbackers (Heffman, Damon) are getting at. This wasn’t one of those cases where the drug companies changed something minor so that they could retrain the patent. Rather, this was something that they legally had to do.

      IF they had to come up with a new delivery mechanism, then they get the patents thereto. That seems straightforward. I can understand the frustration with what they’re charging. The accusation of “price gouging” makes sense (using the word liberally, anyway).

      It’s just that there is this other hand, where this was a forseeable consequence of forcing them to change their medication.

      Back on the first hand, a lot of it hinges on whether or not they could have made this compatible with traditional delivery systems – or alternately whether companies will be able to develop alternative delivery systems (the same way that not-Apple makes products compatible with Apple products).

      If they’re going out of their way to prevent that from happening, I start to lean much more in the critical direction of the drug companies. (And I should say that regardless of my own verdict on this particular case, much of what Russell is talking about is problematic in its own right and should be addressed, probably through patent law modifications.)Report

      • Avatar Chris in reply to Will Truman says:

        I think it’s safe to say that there are two actors to blame for this: the pharmaceutical companies for, as Russell put it, “their stamped every last dollar they can stomp out of American customers,” and the federal government for not seeing that coming when they banned CFCs. The waiver couldn’t really have been extended indefinitely, and pharmaceutical companies weren’t going to bother with HFAs until they absolutely had to, which means that it probably wouldn’t have been possible to extend the waiver until the patents ran out. But something needed to be done.

        There is a fairly straightforward solution to this, too, but it would require the U.S. becoming a member of the civilized world, and that clearly ain’t going to happen anytime soon, as the political theater we’ve witnessed in the last few weeks makes clear.Report

      • I agree that the requirement to change propellants gave the manufacturers an opportunity to gouge their customers. That does not change the fact that they are, in fact, gouging them.Report

      • Avatar Chris in reply to Will Truman says:

        Ugh, I mangled Russell’s quote. In my defense, I was dodging mosquitos as I typed.

        their stampede toward every last dollar they can stomp out of American customers

        I think pharmaceutical companies deserve much of the blame, the system deserves much of the blame, and the government deserves much of the blame for knowing the system but not predicting what the pharmaceutical companies would do within it.Report

      • Avatar roger in reply to Will Truman says:

        I would add that I would not be surprised if the pharmaceutical companies supported the ban knowing the opportunities it would create to exploit the competitive barriers.Report

    • Avatar Michael Cain in reply to Glyph says:

      Maybe not…delivery system can have a pretty big impact on the drug’s efficacy…

      This was my thought, that the patent is based on the work to show that this propellant in combination with this drug produces good results. Eg, I wouldn’t want to put CO2, used as a propellant in lots of things these days, into an inhaler.Report

    • Avatar Jonathan McLeod in reply to Glyph says:

      Glyph is our resident Cheez-In-A-Can expert.

      Which makes him surprisingly popular at cocktail parties.Report

  7. Avatar Chris says:

    I know that when the switch to HFAs was complete, most (if not all) of the pharmaceutical companies producing them offered coupons to customers, so that you could basically get a really inexpensive inhaler once a year. I suspect that this looks like a giant savings to customers in the aggregate, but if you go through more than one inhaler per year, you’re still screwed on the second one, no matter how much savings there was in the aggregate. I assume the coupons were mostly a PR campaign.

    I should start buying Advair overseas, though I have honestly never looked into how to do it. It’s prohibitively expensive, though, as are the HFA inhalers, even with prescription drug coverage.Report

    • Avatar Chris in reply to Chris says:

      Also, just before the switch to HFAs, Walmart had started selling really, really inexpensive generic inhalers. If I remember correctly, without insurance, a 200-puff generic albuterol inhaler was something like $15-$25 (I can’t remember exactly). It was nice, but extremely short-lived.Report

  8. Avatar NewDealer says:

    I’m with Chris. The pharma companies are not completely to blame but they are not completely blame-worthy either in my mind (as a bleeding heart liberal who believes in doing the right thing).

    Pharma is simply playing by the rules of the system and the system is horrifically broken and leads to all sorts of unintended consequences. The bans on CFC are good but the pharma companies have very clever lawyers who figured out how to turn lemons into lemonade and get new and profitable patents. To be fair, they are hired to do this and as lawyers they need to work for their clients best interests. Francis laid out why the patent was rightly issued. However, there is a statement about patents and trademarks not being issued if they are obscene or immoral. Unfortunately it is not this kind of immorality that the system thinks about. That requires being a member of the civilized world.

    The Patent system needs radical reform to prevent these kind of simple changes for repatenting. I would also like to see a ban on companies paying other companies not too manufacture generics. That seems to be an antitrust action to me or at least a potentially interesting case.Report

  9. Avatar Kazzy says:

    How much money was likely spent on the new devices/formulations? That seems to be the crux of the matter.Report

    • Avatar Glyph in reply to Kazzy says:

      Yeah, as Heffman alludes above, it’s at least plausible that some of the cost increase is recouping the cost of complying with the new rules.

      How much? Who knows? But for a product people need to have to live (and in the linked interview, people say they are buying less than they’d like to/need to), a small drop in price that resulted in increased overall sales, would seemingly be something the manufacturers would jump at in the absence of other factors.

      Let’s say each inhaler retails at $125, and cost $25 to make (all figures pulled from my rear).

      Guy who needs two/month, but limits himself to one, he pays $125 (=$100 profit to the manufacturer).

      Now, manufacturer drops the price to $100, and the guy starts buying two/month ($200), like he needs/wants – that’s an extra $50 profit to the manufacturer, for doing nothing. In the absence of other factors, it seems like he’d jump at the opportunity to sell more inhalers, and make more money, for no real extra work.

      Again, it’s possible they are gouging *some*, but I am not sure how you quantify how much without knowing what the compliance cost was.Report

      • Avatar Kazzy in reply to Glyph says:

        More than anything, I think this demonstrates why we can’t just leave health care to the free market. Most, if not all, asthmatic people are that way by birth. It is not a function of lifestyle choices. These people are born with a unique and particular need. Fortunately, we can address this need with medical science. WE HAVE THE TECHNOLOGY!

        Now, I fully recognize that the CFC ban itself distorts the free market. And depending on who you ask, patent law either distorts it further or ensures proper functioning.

        But the fact that people may or may not get the medicine they need to live because a company opted for a $100 profit instead of a $75 profit demonstrates really skewed priorities.Report

      • Avatar Glyph in reply to Glyph says:

        My hypo was meant to show the opposite – that in theory at least, market factors should compel the manufacturer to drop the price, so as to sell more.

        That is, in this instance, profit should motivate them to do the right thing. If that’s not happening, it’s not unreasonable to suspect the issue may be something else interfering with the market.

        An inhaler’s not like a MacBook or a Mercedes; for the most part, people only need one car or one computer every several years. Lower the price and you may sell a few more, but not many (not to mention, these are status goods; ubiquity could damage the exclusive “brand” perception, which is not an issue with asthma medication).

        But many people are saying they would buy two or three inhalers/month instead of one, if they were somewhat cheaper, and I see no reason to disbelieve them – after all, they need them (again, unlike an expensive car or computer), to breathe, and for peace of mind. That’s a lot of inhalers you could be selling. For the rest of their lives (people who die of an asthma attack buy no more inhalers).

        The potential to double your sales volume? That seems like something manufacturers would *want*, badly.

        Something’s screwy here, but I see little reason to assume the free market is (all of) it. The (total) CFC ban, the FDA approval process, the patent system, the unbreakable linking of “drug” (which didn’t change) to “drug delivery system” (which did, slightly), the opacity of product & service pricing within our screwed-up insurance system.

        If the manufacturers opened their books and showed the increased cost was 100% (or 90%, or 80%) attributable to recouping what it cost them in R&D and FDA Approval for the new formulas, then we’d do…what?

        Tell them they should eat that cost, or look at those other factors?

        Wouldn’t the quickest fix be to pass a law exempting inhalers from the CFC ban, so generics of the old established products could be rushed to market? Isn’t the market sort of being stopped from solving the problem?

        [goes to the mailbox, waits patiently for check from Big Pharma]Report

      • Avatar Kazzy in reply to Glyph says:

        Glyph,

        Your hypo does indeed point that out. My argument is that we shouldn’t base things like “Should people have access to essential medication on” on “Who will profit from it”?

        I agree that the real culprit here is complete shortsightedness on the part of the government in removing the exemption (see below). If our conspiracy theory is on point and the exemption lapsing was something the manufacturers pushed for… oi. Even if their profit margin is slim, they gain huge market share because the generics are gone. At least for now.

        So, yea, blame the FDA and whomever else was involved in that decision making process. But let’s get away from the idea of, “Let’s hope it is profitable enough for the drug makers so people can stay alive.”Report

      • Avatar Glyph in reply to Glyph says:

        Or (and this is perverse) think of it this way –

        Big Pharma wants to sell as many inhalers to asthmatics as it can.

        Big Tobacco wants to sell as many cigarettes to smokers as it can.

        In both instances, you have a group of consumers who want – nay, need – your product. (Ignore for a moment the overlap in the groups:-)

        And the cheaper it is, the more they will buy of it.

        Cigarettes are now outrageously expensive, I am told.

        Did that price increase occur because Big Tobacco wanted to “gouge its customers”?

        Or did it occur because we (rightly) tax the hell out of Big Tobacco, and they want to make a profit on top of that?Report

      • Avatar Kazzy in reply to Glyph says:

        I’m not sure I follow, @glyph .

        Let’s assume that the total cost of making an inhaler is $25, as in your original example. This includes R&D, materials, salaries, and paying the cleaning crew that empties the receptionist trashcan. Why is the debate about whether they should charge $100 or $125? Why isn’t it available for $25??? Why isn’t the government leading the charge on this work and selling it at cost? Even if they have to roll into it the four other attempts that failed, when we are dealing with essentials, the goal for markup should be zero.

        I trust that you know I skew liberal but am not the biggest fan of the government having its hands in everything. But some things, yes. Life saving medicine is one of those things. Essentials, yes.Report

      • Avatar BlaiseP in reply to Glyph says:

        No, Kazzy. The first inhaler sold cost about 50,000,000 USD to make. Bare minimum. Thereafter, the drug firm amortises its expenses over the patent lifetime, going through the standard marketing arc, first recouping its development costs, its testing costs, licensing costs — it’s no joke. Drugs don’t cost $25 dollars a vial.Report

      • Avatar Glyph in reply to Glyph says:

        BP, he was using my hypo, so if it’s an inapplicable/bogus hypo, that’s on me.

        I merely was saying that while it’s possible Big Pharma is gouging (at least some), it seems at least plausible to me that there are other reasons besides greed for (at least some of) the price hike, since greed would normally be a fine motivator to drop the price a bit and make it up in volume.

        That said, it wouldn’t be the first time that a greedy seller claimed to have non-obvious costs that were out of their hands, and attempted to charge outrageous prices that didn’t pass the sniff test. So I’m not saying they are NOT doing any of that, either.Report

      • Avatar BlaiseP in reply to Glyph says:

        The drugs firms are placing huge bets no Vegas operation could possibly handle. Tens of millions of dollars can get pumped into a drug which doesn’t make it into human trials. Once it does, there’s billions of dollars in potential liability to manage.

        The drugs firms are like prospectors. Some drugs pay off, big time. But the appearance of new drugs is slowing down. The money’s now going into isomerising existing drugs, moving one atom in an existing molecule under patent, seeing if the drug still works. Paroxetine, swapping a deuterium for a hydrogen. It’s patentable. Concert Pharmaceuticals has made a fortune doing deuterium swaps of this sort.

        There is no Free Market in drugs. It’s an Expensive Market, where the table stakes start at 50 million dollars. Usually more. They can’t recoup their investments in other countries, those aren’t free markets. They’re all warped by subsidies and bulk purchases, maybe we could do the same. I don’t know. But for every successful drug, hundreds, thousands, never made it through trials.

        It’s more than recouping the costs of licencing, though it is a fairly serious line item. I find it troubling we’re asking drugs firms to pay for the research to certify their own drugs: if that’s not conflict of interest, I don’t know what is.

        We want these drugs firms to go out and find us cures for diseases. In medicine, there are precious few “cures” for anything and the drugs which do qualify as “cures” are rapidly losing relevance. Just because “We Have the Technology!” does not mean we’re using it appropriately. It’s always been trench warfare with us and the bugs. They gain a few yards today, we gain a few tomorrow. The best we can hope for is to attenuate the worst of the symptoms.

        Any talk of whether or not people will die, DIE, because some drugs firm doesn’t lower its price is to ignore the obvious. It’s a market. Supply and demand. Who’s going to pay back the drugs firms for the research they put into drugs which didn’t get through clinical trials? Want to really fuck up that marketplace? Dictate the “fair” price of those drugs. Like the fable of the Little Red Hen, everyone’s ready to eat the bread when it’s ready. All that hard work of plowing the field and planting the wheat — that’s for someone else. I have the human right to eat bread others cooked, that’s the line we’re getting.Report

      • Avatar Kazzy in reply to Glyph says:

        @glyph

        I don’t know what the profit margin on these drugs are. I agree that this isn’t necessarily gouging, unless the companies were somehow involved in the recent expiration of the exemption. I just wonder how well the for-profit model is serving us in the health care industry.Report

      • Avatar Glyph in reply to Glyph says:

        @kazzy I just wonder how well the for-profit model is serving us in the health care industry.

        I see similar sentiments a lot, and claims that health care is just so fundamentally different from other scientific and manufacturing processes (and products and services derived therefrom), that we must treat it totally differently.

        And maybe that’s true.

        I just know that cars are better than they used to be, and computers, and TVs, and etc., etc.

        And in many cases, cheaper too – at least, the equivalent of last year’s model is cheaper (the newest model may be more expensive; though not even always so – I’ve bought 3 sets of earbuds now from one company, and each new model was cheaper than the last, while remaining remarkably consistent in quality – in fact I’d say the latest, cheapest ones may be the best of the lot). Sometimes cheaper to run (better gas mileage, less electricity drawn).

        And I certainly attribute part of those advances to for-profit models, to the desire of human beings to become rich beyond the dreams of avarice.

        So I think the burden of proof is on others to explain why for-profit health care is unlikely to result in the kind of for-profit scientific advances we see elsewhere.Report

      • Avatar Kazzy in reply to Glyph says:

        @glyph
        There is probably no way to know for certain. It would be easy to say that the asthma medicine would be cheaper if the system wasn’t for-profit. But maybe the medicine wouldn’t even exist. Who knows?

        Honestly, this gets at a broader societal issue I struggle with, namely extreme individualism coupled with a sort of internalized profit motive.

        By and large, we have a societal value that teaches people to focus first and foremost on their own interests. Yes, there is probably some extent to which this is human nature, but America seems to take it to an extreme. What little research I’ve done into cross-cultural educational comparisons, there are other societies, thriving societies, that have a much more interdependent streak as compared with our fierce independent streak.

        So, the for-profit model probably isn’t a problem if you have people willing to say, “Wow, I’ll make $500,000 a year doing something I enjoy AND it will help save people? Holy crap, yes!” But when people say, “Well, I’m only going to do this if it nets me $500,000,000 and to hell with whomever is harmed if I don’t do it,” it seems that we, as a people, have gone askew.

        Maybe this is pie-in-the-sky idealism. But, again, my amateur research tells me it works elsewhere, namely in Japan. So why not here?Report

      • Avatar KatherineMW in reply to Glyph says:

        Glyph – I think the issues that make the medical field different are two: price inelasticity, and patent-based monopolies. When you combine them, you don’t get a free and competitive market – you get one where a company can charge anything for a new medical treatment and people will have to pay it or die.

        We’ve got competition and improvement in, say, the MP3 or tablet market because the government didn’t say “the first company that makes one gets to patent the very concept of a tablet, and nobody else is allowed to work on them for 20 years”. That would retard advancement in the area of electronics pretty substantively. And that’s functionally what exists in the health care industry, with the added problem that people can’t simply decide to go without medicine the way they could decide to go without a tablet if they considered the price unreasonably high.Report

      • Avatar Glyph in reply to Glyph says:

        “the first company that makes one gets to patent the very concept of a tablet, and nobody else is allowed to work on them for 20 years”. That would retard advancement in the area of electronics pretty substantively. And that’s functionally what exists in the health care industry

        Wait, what? I was under the impression that sure, you can patent a molecule – but you can’t patent what the molecule DOES (the issue it targets). So certainly two drug makers can tackle the same problem simultaneously, they just have to do it via different means or molecules.

        We have multiple medications for many issues – I can probably name three different SSRIs off the top of my head, made by three different companies; and SSRIs are just one type of antidepressant. So clearly companies can work on “antidepressants” all they want.

        with the added problem that people can’t simply decide to go without medicine the way they could decide to go without a tablet if they considered the price unreasonably high.

        I agree this is unfortunate, but many new and improved things will always be priced very high at first; advances in science and manufacturing (and widespread adoption, though for rare medical conditions this last may not apply) will usually, eventually bring almost anything not-rare within reach of the masses.

        I know many people would prefer that we try to provide everyone today with a civilized baseline of care (something I am not opposed to in principle, with the sticking point, as always, of what we consider “civilized baseline”); but the risk that doing so significantly delays the future – with its cheaper, better, more widely available treatments – getting here as quickly as it otherwise would, is one that I think should not be taken lightly.

        We’ll lose lives unnecessarily to that retardation of advancement too – by taking longer than strictly necessary, to move out of what will no doubt be one day viewed by some future Dr. McCoy as “the Dark Ages”.Report

    • Avatar Notme in reply to Kazzy says:

      I disagree, Russell doesn’t appear to care how much things cost to make, only how much the company is charging for them. He then declares it to be “gouging.” (whatever that is) based on his personal opinion of what companies should charge.Report

      • Look at that! It seems that I provided a handy description of what I considered “gouging,” right there in the main post!

        And, for the record, I care a great deal how much things cost to make. I do not, as it happens, believe that it costs five times as much to make Proventil HFA as it did to make albuterol MDIs with a CFC propellant.

        But thanks ever so for stopping by the chat!Report

  10. Avatar Jason Kuznicki says:

    If we’d never abandoned the old, CFC-based inhalers, how long would it have taken for asthmatics to destroy the ozone layer? Could they ever have done it?

    Even Mother Jones says these products wouldn’t have mattered.

    What’s the likelihood that drug companies lobbied to have their own product banned, so they could market the more expensive one — in the name of the environment?

    Cynical, I know, but it would be a classic example of Baptists and Bootleggers…Report

    • Avatar Chris in reply to Jason Kuznicki says:

      I wouldn’t be surprised if that were the case.Report

    • Avatar Glyph in reply to Jason Kuznicki says:

      how long would it have taken for asthmatics to destroy the ozone layer?

      COULD WE AFFORD TO FIND OUT?!

      What’s the likelihood that drug companies lobbied to have their own product banned, so they could market the more expensive one — in the name of the environment?

      Well, they did have their lobbyist help draft the so-called “Don’t Throw Us In The Briar Patch” bill.Report

      • Avatar Glyph in reply to Glyph says:

        More seriously, CFCs were banned across the board, right?

        So they wouldn’t have needed to lobby to have their products banned; they just needed NOT to lobby for any exemptions for their product.

        “Well, if it’s what we all have to do for the environment, we’re all in this together…”

        Even cheaper!Report

      • Avatar BlaiseP in reply to Glyph says:

        Well, they did, sorta. Here’s the deal. CFCs are bad. They destroy ozone. So what did we replace them with ? hydrochlorofluorocarbon. And hydrofluoroalkanes. This new patent is complete bullshit. We’re using perfluorinated alkanes in blood substitutes already. There’s nothing new to test.Report

      • Avatar Gaelen in reply to Glyph says:

        I saw that the good doctor was linked to by Kevin Drum, who in turned provided some evidence that the pharmaceutical companies did actively lobby to get CFC’s banned.

        If anyone doesn’t feel like following the link. Apparently a number of scientists pointed out that CFC’s were not a real danger to the ozone, and that HFC’s were a greenhouse gas. So, as a consequence, it would have been best to just make an exception to asthma inhalers. The pharmaceutical companies decided to lobby for banning CFC’s, and “[t]he lobbying paid off. In 2005, the Food and Drug Administration (FDA) approved an outright ban on many CFC-based inhalers starting in 2009.”Report

      • Avatar Will Truman in reply to Glyph says:

        Jason called it. I wish I could say that I was surprised.

        This is one of those things that makes me feel really, really downhearted.Report

    • Avatar Kazzy in reply to Jason Kuznicki says:

      http://www.mnn.com/health/allergies/blogs/fda-to-ban-certain-asthma-inhalers

      Interesting article.

      CFCs were banned in the 70’s except in medical devices the FDA deemed essential. Two million people took advantage of the exemption by using an OTC inhaler that was, presumably, essential to their health.

      For some reason, the FDA changed the law back in 2011. I wonder why…Report

  11. Avatar Jaybird says:

    If the old patents have expired, does that mean that a new company could, in theory, make a generic version at a price that wouldn’t have anything like clinical testing baked into the cake?

    It seems like a license to print money, if you could make a product that people want really badly instead of the much-more-expensive new-and-improved “chewable” version. You could do it for cost plus a double-digit percentage, still come in under the new product, and make a mint.

    Right?Report

    • Avatar Chris in reply to Jaybird says:

      The problem is that the old versions with expired patents are now banned.Report

    • That’s the case with “generic” Augmentin (amoxicillin clavulanate), which is still ridiculously pricey but cheaper than the name brand.

      And yes, I imagine a company could do that with Loestrin Fe.Report

      • This is a weird dynamic for me. A corporation says “we won’t make enough money, making this product X… so we’re not going to make it.”

        I don’t see how that isn’t legit.

        I mean, I understand how some people might die without product X… but you can only appeal to the better nature of people for so much for so long before they see that your appeals to deep morality are very much in your self-interest and they start thinking about their own.Report

      • Avatar greginak in reply to Russell Saunders says:

        Of course the corporation has a point and we also know no corporation would ever be less than completely honest about something like that. We should just do what they say is best.Report

      • So start your own. The money printing press is *RIGHT THERE*.

        Imagine how easy it’d be for you to make Loestrin Fe and undercut generic amoxicillin clavulanate!

        You could further line your pocket giving Ted Talks about how you did it!Report

      • @jaybird I think it depends on how much money one considers “enough.”

        As the Times article makes very clear, the same name-brand asthma medications cost a fraction of what they do here in other countries. Yet Merck hasn’t declined to sell its inhalers in Europe or Japan. Flovent and Advair and the rest are all readily available.

        I frankly don’t know why someone doesn’t make a somewhat cheaper version of generic Augmentin. At least in its case, most people don’t need to take it every day to maintain their health. Not so for certain asthmatics and drugs like Flovent. They either take their medication or their condition worsens inexorably, and doing without means that eventually they stop breathing well.Report

      • Avatar just me in reply to Russell Saunders says:

        I could be completely wrong. But don’t other countries cap the costs of what the drugs will sell at in their countries? Maybe the United States consumer is subsidizing all of the other countries drugs. If Canada says you can’t sell this drug for more than X number of dollars, maybe we make up the difference.Report

      • Avatar greginak in reply to Russell Saunders says:

        In countries with Uni HC the gov, if they are payer, negotiates rates and since they are the big buyer they can get good rates. I do think some places also cap rates. The argument that we subsidize other countries meds is popular on the right but i think its pretty weak. While pharma companies likely do make much more money here because they can charge a lot more that doesn’t imply they wouldn’t make new drugs or any drugs at all if they couldn’t make a giant pile here. They would make less money if they couldn’t charge as much as they do here. There is no evidence they would go out of business or stop wanting to make a profit. In fact they would definitely still try to make a profit so i can’t see the massive harm. That argument also avoids the point that a lot of research on new drugs and cures starts in universities and is funded from public money. There is no reason we couldn’t increase the amount of NIH funding if we wanted.Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        Pure research might be done at university. Applied research isn’t.Report

      • Avatar just me in reply to Russell Saunders says:

        Maybe Russell can answer this question. Am I right that the government caps payments to doctors for medicare patients. A person on medicare can pay one price when going to the doctor and someone who has private insurance could pay a higher price for the same care? I have heard this is true and I am curious if it really is.Report

      • This is a weird dynamic for me. A corporation says “we won’t make enough money, making this product X… so we’re not going to make it.”

        Well if they’re not going to make it anyway…would it hurt to offer them a big wad of cash in exchange for their patent?

        Would it really be off for the government to do so?Report

      • Pure research might be done at university. Applied research isn’t.

        Yeah, but a lot of the bottlenecks at present are mostly about fundamental research and basic research rather than applications.

        A lot of biochemistry isn’t well understood because most of the advances came from applied research using what are more akin to engineering principles than fundamental knowledge.

        Big time funding of the very basics of biochem would probably open some pretty substantial avenues of research.Report

      • Avatar greginak in reply to Russell Saunders says:

        Yes pure research is done in uni’s, but that typically leads to applied research at pharma. For new types of meds or treatments they start as pure R without which the pharma’s wouldn’t have anything to apply.Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        I disagree, Nob. The bottlenecks are in clinical trials. They’re expensive, time-consuming and fraught with all sorts of science problems. Researchers fall in love with their molecules, fudge research data, drop important edge exceptions. Human nature. It’s hard to stay objective.

        Human trials have serious ethical obstacles to overcome. It’s being outsourced to India and China and other places since human research is so highly regulated and subject to all sorts of ethical guidelines in the West.

        Anyone can kill the bug in the petri dish. Might get as far as killing it in the mouse. But it’s a long, expensive, ethically-questionable route to “We Have the Technology!” and a big payoff.Report

      • That’s certainly true, about trials being a problem, but part of it is that there’s really no safe “in between” between clinically trying it on mice and moving on to people. Better fundamental understanding of biochemical processes would allow more to be done with say simulations instead of having to use human test subjects.

        It’s not a question of hardware, it’s one of not having the right variables to plug into a software solution to do that sort of guess work. Tons of other fields are able to use computer simulations to get rid of cumbersome physical research or at least reduce the need for really expensive experimental hardware and focus on the really important stuff that needs funding.

        Pharma could probably save a lot of money if they made a big, pooled push on this, but their need to keep up profitability goes a long way to make it more difficult.Report

      • Well if they’re not going to make it anyway…would it hurt to offer them a big wad of cash in exchange for their patent?

        Hey, I’d be fine with saying that that would accelerate the patent’s expiration if not cause it outright (though I *DO* wonder what perverse incentives that might create in the short term).Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        The ethicists need to climb their skinny asses out of the Ivory Tower and start touring the primate cages. Getting awfully sinister back in there by my lights. Sentient beings in those cages.Report

      • I mean, the point of the patent system was not to keep the dog in the manger for as long as possible.Report

      • Avatar Glyph in reply to Russell Saunders says:

        But the manger is the only thing holding the dog in place while we spray cosmetics into his eyes.Report

      • Avatar Kim in reply to Russell Saunders says:

        Applied research isn’t done at universities?
        News to me.
        We do all sorts of research in Pittsburgh,
        from robots to blackops to organ transplants.

        Heck, we just used some DTI to determine
        how best to cut a tumor out of someone’s head.
        (it’s debatable whether you want to call
        that “applying basic research to a problem”,
        granted).Report

      • Avatar BlaiseP in reply to Russell Saunders says:

        Here’s some news for you, Kim. Universities make loads of money from patents. But until I see a Panther Puff inhaler for sale, with the University of Pittsburgh crest on the side of it, let’s not start in on what constitutes Applied Research.Report

    • Avatar Brandon Berg in reply to Jaybird says:

      Well, you can’t make a mint, really, because you have to compete with everyone else making a generic. And the name-brand drug, which many people still buy just because it’s name-brand. Which seemed kind of silly, because it’s the same thing, until the Rambaxy scandal, when it turned out that it wasn’t.

      Actually, I think the government does give the first generic manufacturer a six-month period of exclusivity, where only they get to make the generic and they only have to compete with the name-brand drug.

      Also, keep in mind that firms price to maximize profits, not to recoup investment costs. The patent holder isn’t going to keep charging monopoly prices once the patent expires, because they don’t have a monopoly anymore. Doesn’t matter whether they made back the development costs several times over or lost a bundle on it; they have to lower prices to compete with generics. They can still charge higher prices than the generics because of name-brand recognition, but not so much higher that the generic becomes the obvious choice for everyone.Report

  12. Avatar Tod Kelly says:

    I missed the Time article, so I’m really glad you wrote about it, Russell. Great post.Report

  13. Avatar KatherineMW says:

    I think there’s two debates here.

    The big one is on what role patents have to play with regard to widely needed life-saving medicines and devices. How do we balance making these things profitable enough that they’re actually developed while ensuring they’re still affordable enough to be purchased by the people who need them to survive? Personally, I’m a supporter of short patents (5 years or less), especially as regards production of generics in and for the developing world – when poor people can’t purchase a live-saving medication because it’s financially far, far out of their reach, then neither the company nor the poor people benefit. If the poor people have the option of “generic drug” as opposed to “nothing”, they’re better off whereas the company is no worse off because these people weren’t financially capable of buying their brand-name product anyway. I’m aware that there are still incentives issues with this, though. At any rate, I don’t want to derail Russell’s post into focusing on this wider issue.

    The narrower debate is about the specific situation with the inhalers and asthma meds. Here, I think the government’s pretty clearly at fault for absence of foresight. In normal circumstances, if a company changed something slightly and then patented the new version, people could just keep using the old version – or so I would think (Russell’s mention of the new birth-control pills is making me question this assumption). Here, the government’s forbidden them from doing so. If legislatures had put some thought into this, it shouldn’t have been too difficult to exempt the CFC-producing inhalers for a while in order to prevent prices from skyrocketing.Report

    • Avatar Brandon Berg in reply to KatherineMW says:

      Credit where credit is due: Aside from the fact that five-year patents are nuts (they’d expire before the drugs got through trials), this is a very good comment.Report

      • they’d expire before the drugs got through trials

        I’d thought about that, though you might be able to do something like “Five years from release.”

        Then they might withhold release looking for a better five-year window (“Let’s wait for the virus to really catch on, then we’ll release this!”). Unlikely, but possible.

        Five years after FDA approval? That does seem short. The patent issue here, to the extent that there is one, lies somewhere else I think. Either by virtue of the fact that the “new product” is a derivative, or that they’re patenting something that shouldn’t be patentable (“Using something that sprays something to the back of your throat, but without CFC’s… we hereby lay claim to that.”)

        The only dissatisfaction I have had with this thread is that I am not yet clear on the patent ramifications. I think it’s out of our collective wheelhouses.Report

      • Avatar Brandon Berg in reply to Brandon Berg says:

        Yeah, even five years after FDA approval is probably too short. The bottom line, really, is that there’s a trade-off. Anything that makes a drug patent less lucrative, be it shorter patent periods, price controls, greater use of generics, or even reduced government assistance for consumers of prescription drugs, is going to result in less incentive to develop new drugs. I’d much rather have the government subsidize the purchase of patented drugs for consumers than have it shorten the patent period or otherwise make drug development less profitable.Report

  14. This is a great example of price inelasticity in action.Report

  15. Avatar Brandon Berg says:

    This is somewhat tangential, but a few people have said that pharmaceutical companies routinely make minor, non-functional changes to drugs just so they can get new patents, and I’ve seen this claim made many times elsewhere.

    This rings false to me for a number of reasons. Or at the very least there must be more to the story. If the original drug has gone off patent, there will be generics available. If the new drug is really no better than the original, there’s no reason to buy it instead of the much cheaper generics. Is the FDA supposed to approve drugs are not in any way or in any circumstances superior to the original? Even if they are, why would doctors prescribe them? And why would insurance companies pay for them?

    So we need three fish-ups in series for these drugs to make any money. Or maybe it’s not true that the drugs are functionally identical. Minor changes to a drug’s molecular structure can make a big difference. Make it more efficacious, reduce side effects, etc.

    Maybe a few duds make it through due to a fluke in the clinical trials. Maybe some modified drugs are marginally better, but not enough of an improvement to justify the price increase. Maybe some work better for some patients but not for others. But I call BS on the claim that drug companies are routinely extending their patents indefinitely with useless tweaks.Report

    • Avatar Jim Heffman in reply to Brandon Berg says:

      “Is the FDA supposed to approve drugs are not in any way or in any circumstances superior to the original?”

      No, and in fact they do not do so. If the new product is not better then it doesn’t get approved.Report

      • Avatar greginak in reply to Jim Heffman says:

        Wrong Jim. The FDA tests for safety not to prove if a new drug is better than an old drug. In no way does a new drug have to be better to get approved. Often new drugs are just re-branded versions of an older drug, just marketed to a different population. Or new drugs are aimed at treating a small group that isn’t helped by other more common meds. New drugs often just give docs more options for treating an illness.Report

    • Avatar Kim in reply to Brandon Berg says:

      Brandon,
      Oh, they aren’t useless tweaks.
      But they’re still bullshit tweaks.

      Change the timerelease, and you can get a new patent.Report

      • Avatar Brandon Berg in reply to Kim says:

        Which is fine. Consumers have the choice of the off-patent drug or paying more for the one with the different time release schedule. If it adds enough value to justify paying the higher price, great. If not, no one has to buy it. If doctors are prescribing the new version without medical justification, and if insurers are paying for it for no good reason, that’s on them (and on the government, if the insurers are required to cover it).Report

      • Avatar BlaiseP in reply to Kim says:

        Not really. They can get the generic if that’s what’s on the scrip.Report

    • Let’s say that Pharmaco has a drug called Vlaxamin XL2, which must be taken twice a day within restricted time windows. As the patent runs out, they release Vlaxamin XL1, which only needs to be taken once a day and at any time. The impression some people leave me with is that because of Vlaxamin XL1, they get to keep the patent on XL2, which if true doesn’t make sense to me.

      But if XL2 is available in generic form, then my response is similar to Brandon’s. I’m not sure why Pharmaco can’t be releasing XL1 while Genericom releases XL2 under a generic name. That seems like a more reasonable state of affairs.

      Where that does get tricky, though, is if Genericom takes the formula of XL2 and figures out its own way to have a once-a-day version.Report

      • Avatar Brandon Berg in reply to Will Truman says:

        @will-truman They don’t get to extend the patent on the original drug. The original drug goes off-patent and they get a patent on the new drug. Many leftists seem to believe that this gives them the power to force people to ignore the old drug and buy the new, expensive one that isn’t better in any way.

        Because corporations have black magic at their command.Report

    • Avatar Francis in reply to Brandon Berg says:

      One particularly unpleasant trick is that the patent holder pays the manufacturer of the generic not to produce it. This works because there aren’t that many manufacturers of generic drugs.

      Can you say “anti-trust”? (actually, last I checked this very issue was being litigated. But pharma patents are their own separate sub-specialty, so I welcome correction.)Report

  16. Avatar Cathy says:

    This comment is about patents in general, which as Will pointed out is a thing lacking in the thread, so I thought I’d throw in what (relatively little – not a patent lawyer) I know about it. In general, I would say that thee call for changing the patent laws gets thrown around in a lot of places it doesn’t need to be; many of the problems with the system are a) implementation issues, not legal ones; b) outweighed by the incentives & benefits the system provides; or c) more perceived than real. All I want to say about (b) is that drugs and medical devices (anything that needs FDA approval and testing) are the one place where even die-hard patent skeptics, like Judge Posner on the 7th Circuit, will admit that patents are necessary for the kind of advancement we currently have. With regard to the other two factors, though, here are some thoughts.

    1) Should these new inhalers be patented in the first place?

    I haven’t seen the actual patents for the new inhalers, but the article left me curious. To start with, how many patents are there for these new inhalers? One, of one design, that all the other companies are licensing from the first patent-holder? Or one for each company, or for each drug? In any event, there is the possibility that some of these patents were granted when they should not have been, even within current patent rules.

    Namely, in addition to the “new and useful” standard mentioned upthread, there is another criterion: “non-obvious.” The details of that can get obtuse, but the general point is that if someone in that field would have thought of it, you can’t patent it. So, in a hypothetical situation where the new inhaler mechanism is identical to the old one, except for the propellant (undoubtedly not true IRL), you don’t get a patent just for putting the new propellant in it – unless your choice of propellant was something nobody else would have thought of. If CFCs in other devices were replaced with the same thing already, then that would pretty clearly knock a patent for “old inhaler + already-used new propellant” out of the running. Also, if the companies each developed their own new mechanism, if the mechanisms are all sufficiently similar to one another, that would be a factor weighing in favor of the design being obvious.

    2) Assuming the patents shouldn’t exist, how did they get approved in the first place?

    (First, the America Invents Act, passed in 2011 and fully implemented starting this year, may well have changed a lot of what I say going forward, but in any event it was true when these inhaler patents where issued.)

    One of the pitfalls in the patent system is the amount of review and the way it is slanted. A patent that is initially denied by the examiner goes through multiple steps of review to determine if truly should be denied. This process is obviously pushed by the prospective patent-holder. A patent that is initially approved, though, goes right out the door; none of those review steps happen at all. This system means that we can be fairly confident no patents are denied which should be issued, but the reverse is not true at all.

    So how do patents get invalidated later on? Generally, when the patent holder sues someone for infringing, and the alleged infringer raises invalidity as a defense. This doesn’t necessarily require that the patent holder initiate the lawsuit; you can also sue preemptively, to get a court declaration that you aren’t infringing a patent – but that requires some likelihood that you might be, to have a live question the court can properly address. It’s not clear to me at all that there’s any kind of public interest way to put the issue of an invalid patent on the table; courts have been reluctant to go with “tax-holder standing” arguments in most cases.

    Changing the system to require similar levels of review on initial approval seems like the best course of action to me, and the AIA might well provide for some of that – but in any event, you need the patent office to have levels of staffing that will enable all this review, which requires both more people (with the appropriate science degrees) and more government funding, both of which are in sadly short supply as far as the PTO goes.

    3) So what do you do about it?

    If a patent that maybe shouldn’t have been issued, was approved anyway, and is now costing millions of consumers unnecessary money by virtue of their improperly-granted monopoly, how do you fix that? Uh… good question. At that point, the real issue is that a government screw-up cost a lot of people money; that sounds like a job for Class Action Partner and his sidekick, Overworked Associate.

    However, whether that works or not depends on how bad government action has to be to give rise to liability, which is not a question I know the answer to (Burt Likko?). Given the complexity and potential vagueness of many parts of patent law (like, whether something is “obvious” is actually a complicated question), it would probably be very difficult to show the PTO acted with anything above simple negligence, if that.

    4) In conclusion, patent laws may not be the problem.

    Any time you see a news story about something that got patented, and you think, My God! What horrible laws do we have, that let ridiculous things like this be patented! It is worth thinking again, that perhaps a more robust (and therefore better-funded) PTO might produce better results under the same laws.Report

  17. Avatar Michael Drew says:

    As a liberal, I’m perfectly happy just owning this result as a cost stemming from unintended consequences of a policy (in this case the CFC ban). It may or may not be enough of a problem that we should revisit the basic policy as a broad matter (i.e. the CFC ban generally – I’d say yes to a revisit, but without prejudice toward abandoning it though with openness to adjustment); there may or may not be complicating factors that would inform that reconsideration (in particular questions around the propriety of the patents involved, whether in particular or in the context of a broader critique of patent law); and there may well be very viable ways to address this situation int he context of a reaffirmation of the basic policy (i.e. simply a carve-out in the regulation for this particular situation, or else a subsidy for the new products to offset these costs).

    I realize that last will create a kind of slippery-slope discussion where other products associated with sob stories of various sorts come to be discussed for similar treatment. Frankly, such discussions seem perfectly agreeable to me. The whole point here is to trade off the economic gains from industry’s use of CFCs for the environmental gains from non-use: if certain of the economic losses are seen to have a social significance that they weren’t initially seen to have, that’s perfectly relevant to policymaking, it seems to me. That’s, of course, complex in the context of a policy that is pursuant not just to national policy preferences, but also to international agreements. Welcome to your future, climate-change activists.Report

  18. Avatar Keith says:

    At $7 a pop in Europe, someone could fly roundtrip in business class and buy few dozen to bring home and end up saving money (unless the drug companies have managed enacted laws making this illegal). There is something F— up about that.Report

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