I’m pretty educated on the pharmaceutical industry for someone who doesn’t work anywhere near it, and last week’s Econtalk taught me a lot. Here’s a teaser.
Developers of new medication are granted a limited term to sell that medication without competition, which generally makes the price higher. This is useful because it creates an incentive for inventing new drugs. But it’s costly, because the incentive is money consumers wouldn’t otherwise spend. Sometimes companies claim patent protection for bullshit patents, just like the software industry. Challenging these patents is costly; to incentivize generic manufacturers to do so, the government grants them a limited monopoly if a they win. For six months only they and the inventor can sell the product.
Only the count starts when the second manufacturer brings their version to market, not when they win the case. If they don’t release a product no one else can either, even if the drug moves off patent in the meantime. Unsurprisingly, pharmaceutical research companies began paying off generic manufacturers to essentially win lawsuits and then never release a generic, thus extending their monopoly past the patent expiration.
Courts have mostly struck that down at this point, and companies have moved to either more subtle rent seeking (“how about we just pay you to manufacture the drug for us?”) or more antagonistic actions…
Dd you know that you can’t have a generic for a name-brand drug that’s no longer on the market? I mean, you can, but doctors don’t write prescriptions for generics, they write it for the name brand and the pharmacist gives you the cheapest substitute. But they can only do that if the name brand is theoretically available. If a company, say, tweaks the formula in an absolutely irrelevant way and files a new patent on that, they can completely forestall generic competition until the new patent runs out.
Big pharma, I’m on your side. I defend your monopoly profits more than almost anyone. But you need to cut this shit out.