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The trade-off of drug exclusivity: biotech seeks protection from competition
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Photo: Lee Nachtigal
The biotech lobby has scored a major success on July 13 when the Senate Health, Education, Labor and Pensions committee gave biotech companies 12 year exclusivity, meaning that their drugs cannot be sold as cheaper generics for 12 years. Biotech drugs are unlike traditional pharmaceuticals; they are derived from living tissue and are currently extremely expensive to produce. The industry claims that the high price of these drugs helps them recoup their research and development costs, and that competition with generics before they are able to recoup their costs would crush the burgeoning industry. The plot thickens: not only is biotech a young industry promising to create new jobs, but is an industry that has sprung up in states like Massachusetts and California, traditionally blue states. It presents these states with a difficult trade-off. Democrats are more likely to advocate for curbing the market power of the pharmaceutical industry, especially now, in light of the health care overhaul that is being debated in Congress. On the other hand, it is unthinkable for any politician, especially a Democrat, to blatantly say “no” to the formation of new jobs in his own state during the recession. Whether 12 years is too much or too little is not something that can easily be answered, nor is there much point to trying to objectively quantify the “ideal” number of years of exclusivity - as the clause travels through Congress, it will be decided mostly on political lines. Surely, even one year is “too much” for a poor person dying of cancer, but as callous as it sounds, that’s not really the point. If the exclusivity period is too short, the industry makes no economic profit, and has no reason to continue existing. If the exclusivity period is too long, though, the industry has neither the incentive to create new drugs nor to decrease the prices of the old ones. There has to be a point at which their old invention stops making them profits and they must create a new one. There must also be a point at which generics can start to compete and the old drug can start to be produced in the most cost-effective way, and priced accordingly. What must be said is that, over the past 50 years, a person’s drug costs as a percentage of their total medical expenditures has skyrocketed. This is not only because of drugs being expensive - we have been able to treat more and more ailments with drugs rather than hospital procedures. This is an extremely important development, and no health care overhaul can be done without taking it into consideration. If healthcare is to be made more affordable, the out-of-pocket price of prescription drugs must be controlled.
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