In December, Pfizer’s patent for Lyrica (chemical name Pregabalin), will expire, and Peter Kolchinsky documents the costs consumers have paid because of it in the opinion pages of The Wall Street Journal:
As a society, we’ve nearly paid the mortgage on Lyrica. It was expensive. The FDA originally approved Lyrica in December 2004, and within three years the drug reached $1 billion in sales. In 2017 Lyrica’s global sales nudged above $5 billion. Along the way Pfizer used many pharma tricks, legal and illegal, to boost sales. In 2012 Pfizer won a lawsuit against generics companies that challenged its patents. In 2009 the company paid a record $2.3 billion fine to the Justice Department for improperly marketing Lyrica.
The full costs passed on to consumers may not end this December, as an FDA program encouraging companies to determine the value of the drug when treating children may allow the patent to extend through June 2019.
But, while Lyrica’s patent will expire no later than next summer, Kolchinsky reminds us that just because consumers are done paying their “mortgage” to the patent holder, the full benefits of open competition don’t always materialize, because “some pharma companies go too far in trying to extend their drugs’ patent lives, turning justifiable mortgages into unjustifiable rents. Occasionally they even rebrand older, off-patent medicines without any innovative upgrades, which may feel like having your house stolen and sold back to you.”
Thanks to the magic of “evergreening,” patent holders are able to extend the life of their patents indirectly by making small changes to drugs under patent producing what is technically a new product. While the original formulation can still be sold as a generic, this prevents another firm from making their own small tweaks because the original patent holder just patented it in the form of a “me-too drug.”
But, even when “me-too” drugs exist, the benefits of generic analogs to prescriptions are still a boon to consumers. One 2014 study found price decreases of over 25% for drugs that lost patent exclusivity. Another study from RAND found the ability of generic drug manufacturers to challenge the monopoly status of patented drugs, made possible by the Hatch-Waxman act, increased consumer welfare by between $92 and $133 billion, with patent holders only taking a $14 billion hit.
Kolchinsky uses the metaphor of paying off a mortgage, but another apt metaphor would be a “rebirthday” of a drug–within the next year, Pregabalin will re emerge, available for generic drug manufacturers to produce more cheaply to the benefit of consumers.