It’s disappointing to see yet more studies published by activist-funded industry critics that fail to recognize the nature of competition in the biopharmaceutical market and use cherry-picked data to draw misleading conclusions.
In a May 2022 article, William Feldman et al. assert that regulatory and patent reforms are needed to “fix” the market for brand-name inhalers. The authors claim that manufacturers of inhalers have employed certain “lifecycle management” strategies to limit competition and maintain their market dominance.
Another article, published in September 2022, ignores the fact that manufacturers invested hundreds of millions of dollars to develop and manufacture hydrofluoralkane (HFA)-based metered-dose inhalers in order to comply with an FDA rule issued as a requirement of the Clean Air Act. Rather the authors inaccurately assert that manufacturers made the changes just to thwart competition.
These articles perpetuate the same old myths that patent protections for new innovations somehow block all competition or are simply used to force patients onto new products. This is untrue. In fact, brand medicines face competition not just from generic and biosimilar versions, but also from other forms of the same medicines as well as other branded competitor medicines.
The reality is that not only were the new HFA-based metered dose inhalers an important option for patients, but they also allowed payers to leverage competition to drive down prices. The real problem is that despite health plans and pharmacy benefit managers benefitting from these lower prices, they don’t share the savings directly with patients.
We can build a better health care system for patients without gutting critical incentives for innovation. Here’s what you need to know.
1. In the first article, the authors use an extremely narrow definition of competition in their analysis. Looking only at substitutable generics is a limited and incomplete approach to measuring the impact of competition on health care spending and patient benefit and costs. While patents and exclusivities might prevent a competitor from bringing an exact duplicate of a medicine to market during the term of the protection, they do not create a monopoly on treating a disease.
In the case of inhalers, the study itself shows that from 1986-2020, the FDA approved 62 inhalers, including 9 generics. That’s an average of almost 2 new products per year — clearly demonstrating that patents are not blocking competition in the inhaler space.
2. The ten therapeutic classes and twenty different active ingredients in the cohort of products included in the Feldman et al. study represent meaningful differences in ease of use, patient device preference and disease control. Medicines compete through effectiveness and price for coverage by insurance plans, and these differences also matter to physicians and patients who consider these factors when choosing a treatment. Patient-perceived satisfaction with their maintenance inhaler device is an important factor driving patient compliance in chronic obstructive pulmonary disease (COPD), and is closely linked to improved health status. The result of this competition is that the net prices of brand medicines to treat asthma/COPD are in fact declining. Research specific to asthma/COPD shows that the average annual net cost of treatment for combination products, bronchodilators and glucocorticoids declined 32% to 62% between 2008 and 2021.
3. In addition, the research, development, and regulatory review of these medicines and delivery devices for asthma and COPD patients require substantial regulatory applications to FDA, based on costly and labor-intensive clinical trials. FDA approval standards for new combinations of medicines and drug device combinations must meet the same rigorous FDA standards as the initial approval, with no certainty of FDA approval. As of 2019 there were 54 medicines in development for asthma and 39 for COPD, many of them potentially first-in-class.
Reflecting the significant unmet need experienced by patients with these conditions, asthma and COPD are estimated to cost the U.S. economy more than $130 billion annually due to hospitalizations, emergency care, and other medical expenses, lost productivity, and premature deaths. Proposals that would discourage ongoing and post-approval research and development could stall the development of new treatment options for the more than 40 million patients living with asthma and COPD in the U.S.
4. The authors themselves acknowledge that a key barrier to the availability of substitutable generics for inhalers is largely due to the significant regulatory and scientific complexity, not patents and exclusivities. To address this the FDA has issued guidance specifically intended to help developers of generic inhalers and has taken additional steps to help sponsors develop complex generics, including generic inhalers, for example through its Drug Competition Action Plan.
The authors also acknowledge that one generic manufacturer was successfully able to bring a product to market even with active patent listings in the Orange Book, clearly demonstrating that patents are not a de facto barrier to direct competition. Another came to market several years after the last patent expired due to regulatory challenges.
5. Despite what the authors and other industry critics claim, there is nothing unusual or problematic about a medicine or device being covered by multiple patents resulting from inventions throughout the product development process, including after the initial FDA approval. Patents are available for many types of inventions, in biopharma and other technologies. Regardless of the technology, they must meet the statutory requirements for the invention being new, useful, and non-obvious.
Patents aren’t just simply granted for each patent application but are thoroughly vetted and reviewed by the U.S. Patent and Trademark Office (PTO). That means a company cannot simply add patents to existing products or obtain patents for trivial changes. Drug-device combinations to treat COPD are no exception. The authors’ suggestions of policies such as allowing only one patent to be honored by the FDA (“one-and-done”) reveal a fundamental misunderstanding of the complexity of drug development and the patent system.
6. The second article uses many of the same faulty arguments to suggest how the federal government should undermine critical incentives for innovation. The authors suggest that FDA should “refrain from banning HFA-based metered-dose inhalers” as though the agency has discretion to ignore the Clean Air Act’s requirements, while completely ignoring the fact that other types of inhalers existed on the market during these decisions that provided other options for patients.
The authors also make contradictory statements, acknowledging that “payers have leverage, since they can always use formulary design to steer patients away from new metered-dose inhalers toward older dry-powder equivalents… which do not emit greenhouse gases”.
7. Our IP system — including patents and statutory exclusivities — is the foundation for incentivizing the development of new treatments and cures for patients, and should be celebrated, not undermined. Policymakers should consider policies that both protect future innovation and benefit patients rather than taking activist-funded academics at their word.
They can start by addressing the real problems highlighted by the authors. This includes ending the perverse incentives that allow pharmaceutical supply chain middlemen to tie their fees to list prices, sharing savings negotiated by pharmacy benefit managers and health insurers directly with patients at the pharmacy counter, and making patient out-of-pocket costs more predictable.