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Healthy Skepticism Library item: 16984

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.


Publication type: Media Release

No Evidence that Additional Price Protection for New Drugs Increased Innovation, Study Finds
2009 Dec 30

Full text:

As Congress considers new measures that would provide 12-14 years of price
protection beyond patents for drug companies, a new study documents that the
European Union provided similar protections without any evidence that they
would benefit patients or increase innovation. Their main effect was to
raise prices and profits.

Called “data exclusivity,” the legislation prohibits any generic competitor
from using the data gathered during tests of a drug’s safety and efficacy
for regulatory approval and public use. Such test data on cars and planes is
public information but is protected by Congress for the drug industry.

Data exclusivity protects the prices companies charge from free market
competition in order to foster greater investments in innovation. It applies
even if the patent has expired. While studies by industry-supported
economists using confidential data indicate that data exclusivity increases
innovation, no verifiable evidence exists, the authors found. Its impact is
broader than patents and has become a favored means for the pharmaceutical
industry to use government power to block price competition from generic
companies. The U.S. Federal Trade Commission, which fosters competition, has
stated that data exclusivity price protections are not necessary.

Based on extensive documentation and interviews with key stakeholders, the
new study found that advocates for the pharmaceutical industry inside the
European Commission (EC) initiated a 10-year data exclusivity price
protection on behalf of the industry and managed revisions of the
legislation. The research was done by a Dutch team led by Sandra Adamini at
Maastricht University, and co-authored by Donald Light, the Lokey visiting
professor at Stanford University and professor at the University of Medicine
and Dentistry of New Jersey. It appears in the current issue of the Journal
of Health Politics, Policy and Law.

The industry’s central claim that the protections would increase innovation
was not supported by evidence, and the European Parliament rushed it through
before less affluent countries from Eastern Europe joined the EU and could
participate in discussing its higher costs. Yet they were most likely to be
affected by the price protections. The resulting 10-years of price
protection became the longest in the world. Now lobbyists in Washington are
trying to establish a longer,12-14 year protection for drugs from normal
free-market competition. A New York Times article reported that the
government price protections would add billions in additional costs to
health care, slowly at first but at an accelerating rate (NYT

Most affected are developing countries, where data exclusivity makes drugs
for cancer, HIV/AIDS, and other serious conditions prohibitively expensive.
Physicians in poor countries working for international humanitarian
organizations such as Doctors Without Borders have reported how the lack of
generic competition makes drugs they need for their patients unaffordable.


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As an advertising man, I can assure you that advertising which does not work does not continue to run. If experience did not show beyond doubt that the great majority of doctors are splendidly responsive to current [prescription drug] advertising, new techniques would be devised in short order. And if, indeed, candor, accuracy, scientific completeness, and a permanent ban on cartoons came to be essential for the successful promotion of [prescription] drugs, advertising would have no choice but to comply.
- Pierre R. Garai (advertising executive) 1963