Friday, February 22, 2008

Another example of patent abuse

I reported a few days ago about the patent abuse by SCO. The Wall Street Journal had yesterday an article on some strategies of the pharmaceutical industry that can also be labeled as patent abuse. Specifically, the article reports that:

Drug makers are trying to keep revenues afloat by raising prices ahead of many drug-patent expirations and the possibility of changing government regulations, part of the presidential candidates' agendas. But aggressive price increases could backfire politically, pushing policies toward greater government power over price negotiations.

In some instances, drug makers are raising prices on medications that are due to lose patent protection so that customers will switch to -- and continue to buy -- similar, newer products that enjoy market exclusivity well into the future.

It's a tactic that pharmaceutical companies use "to shift patients to next-generation drugs by making old ones so expensive," says Michael Krensavage, a drug-industry analyst with Raymond James & Associates. For example, Sanofi raised Ambien's price ahead of its loss of patent protection last year so that it was more expensive than Ambien CR, a new formulation, to encourage patients to switch to Ambien CR, which will be patent-protected for several more years.

So why exactly are we granting pharmaceuticals this monopoly? It is an industry why extremely (obscenely?) high returns that in no way seems to need this kind of protection. If it is capable of locking customers in (addicting them?), it should rather be imposed a sin tax.

PS: on a lighter note, there is a youtube clone dedicated to ... pizza and it features the United States Pizza Team.


Vilfredo said...

This is part of the problem with lobbying and political action committees in the United States. The pharmaceutical industry has the government in the bag. Just see how it can get away with this, or with this refusal of the government to negotiate down drug prices for Medicare and Medicaid. This system of government is despairing.

Graeme said...

They also tend to new versions of drugs just before patent expiry of the original. Extended release formulations are a favourite because they are comparatively cheap and easy to develop.

Anonymous said...

In one year Ambien's patent expires, so there will be clones of Ambien produced which will be much cheaper than Ambien CR.

What's the problem?

Vilfredo said...

Anonymous, as the quote in the post explains, the price of Ambien is increased so that people switch to Ambien CR. Once they are used to it, they will not switch to generics once the patent of Ambien expires, and Ambien CR stays protected for several years. And the difference bweteen Ambien and Ambien CR is minimal...