Patent Expires On Best Selling Drug of All Time

Hugh Pickens writes "The U.S. patent has just expired on Lipitor, the best-selling drug of all time, as the first generic versions go on sale, marking the end of a brand that has dominated the drug industry, lowered the cholesterol of tens of millions of patients, and generated $10.7 billion last year in annual sales. But drug manufacturer Pfizer, dependent on Lipitor for almost one-fifth of the company's revenue, does not intend to go down without a fight. Pfizer is employing unprecedented tactics to hold onto as many Lipitor prescriptions as it can with an aggressive marketing plan and forging deals with insurers, pharmacy benefit managers and patients to meet or beat the price of its generic replacements because even at the lower price, Pfizer has a huge profit margin because of the relatively low cost of materials for Lipitor. Some deals require pharmacies to reject prescriptions for low-cost generics and substitute a discounted name-brand Lipitor while other deals block generic makers from mail-order services that account for an estimated 40 percent of all Lipitor prescriptions. 'Pfizer's tactic of dressing up as a generics company is pulling the rug under the incentive system created to foster the development of generic drugs,' says attorney David A. Balto."

Comments

See. Patents/Copyright spur innovation.

[unity100]

My ass. you grant a monopoly to someone. That someone gets big on that monopoly. You think that they would just let it go when patent expires ? think again. has music industry let it go with copyrights ? no, they are trying to extend it to 120 years now. pfizer is just another example. bad example though - they could just lobby beforehand and try to extend patent durations, like music industry does with copyrights.

Re:See. Patents/Copyright spur innovation.

[geekoid]

Yes, they do. Being able to get sole rightrs on the drug is why tneya re invented. It can cost mollions of dollars.

And this article is much ado about nothing. Patent is expiring, company ups advertising and lowers price.

BFD

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

It's not a patent problem it's an anti-trust problem. Please adjust your 'fixit' suggestions accordingly.

Re:See. Patents/Copyright spur innovation.

[aurispector]

Patents by design grant a TEMPORARY monopoly to cover the cost of R&D and to provide incentive for companies to actually do the R& D in the first place.

The problem with the drug industry is that in order to comply with the regulatory quagmire that is the FDA, they have to disclose essential details about their work publicly long before it can go to market. Hence patents must be acquired long before the drug can make any money. These days drugs cost literally billions of dollars to develop. Burning patent life during the R&D time robs the companies of profits they would have earned, driving up costs for the consumer as they must raise prices in order to recoup R&D expenses in the shortened time the product is on the market under patent. Remember, these drugs save lives and directly improve the quality of life for potentially billions of people. These same people will eventually get reduced cost access to the drug when it goes generic off patent.

Contrast this with the entertainment industry: Anyone can pen an idiotic ditty for virtually nothing, in basically no time at all. The product merely provides people with fleeting, momentary amusement. No lives are saved, no diseases cured. Even the biggest, most expensive blockbuster movie costs a fraction of what it cost to bring lipitor to market..

Now unless you're an idiotic, dirty, lazy hippie who thinks everything should be free, you will have to admit that unless people are going to get paid, there is no way they are going to spend all that time and effort on drug development even if the end result means lives are saved. After all they have mouths to feed, mortgages to pay, etc, and the pharmaceutical industry is one of the few areas left in the US consistently providing high paying jobs to smart, motivated and educated people.

Turns out the profit motive is a terrific way to get people to do useful things. Who'da thunk that people were willing to work so hard in order to get ahead. Amazing, isn't it?

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

You don't need patents to commercialize medicine. With the exception of clinical trials, everything could be done in a free market just as well (and did; aspirin was invented in Germany but couldn't be patented there; in fact in the early part of the 20th century, before Germany and France allowed drug and chemical patents, they were the center of innovation in those fields.)

Clinical trials are like a public good, and all things told society would maximize its wealth by ditching patents and funding clinical trials with taxes. A very good read on the myths of copyright and patents is "Against Intellectual Monopoly".

Re:See. Patents/Copyright spur innovation.

[artor3]

Key word being try. We don't have to let them. And we certainly shouldn't overreact by abolishing IP entirely.

Re:See. Patents/Copyright spur innovation.

[MightyYar]

We should be cutting the middle-man and funding those projects more

I think you need both systems. Academia is just as attractive to hucksters as the free market when flush with money. How many BS grant proposals get written just to finance the existence of a department? The university system is one of the crowning achievements of humanity, but let's not get carried away and think it can replace capitalism.

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

I just don't buy that we'll stop innovating if patents and copyrights disappear.

You don't need to, because that's a strawman. Proponents of patents/copyrights hold that those things get us more innovation than we would without them, not that there would be none at all without them.

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

Your posts are those of a 2.5 million uid. Anyone who has been on /. as long as you have should know better. You are being modded down because bring up Apple is off-topic enough to be considered flamebait. While the subject is patents it is a completely different debate. At hand what a company does when its patent expires. To be on topic you could debate the length of that patent (hey $10.7 Billion in revenues in one year, maybe the patent should be fewer years). With Apple the argument is not the same. The argument is about obvious and non-obvious patents (hey its a rounded rectangle, that shouldn't be a patent).

And you insult someone who challenges you rather than argue your case. I've debated Mr. I like to lick Butts before. I don't agree with all of his posts but he can make a good case for his views.

Re:See. Patents/Copyright spur innovation.

[Jah-Wren Ryel]

Drugs come from... drug companies, not from universities, because drug companies have the billions of dollars to put a compound through clinical trials and the expertise to make the drugs usable.

And don't forget, they've got twice as much money for advertising those drugs as they have for researching those drugs and running those clinical trials.

Re:See. Patents/Copyright spur innovation.

[blakelarson]

A drug trial can literally run more than $10M easily. Are you telling me that a government should fund every companies clinical trial at $10M a pop? Don't clinical research orgs. stand to make a *lot* of money off of that? Or should the government decide who gets this clinical trial money? Not sure if you know this, but the government isn't always the best judge of which companies / ideas to support.

Re:See. Patents/Copyright spur innovation.

[Obfuscant]

If Pfizer still has a big profit margin after the patent has expired, why wouldn't they have invented anyway?

Because the costs of manufacturing a drug once it has been created and approved are much less than the costs of developing one. They will still have a good profit margin TODAY because the costs of designing and testing the hundreds of potential candidates they went through to get to a final, working drug were paid off during the patent period.

They wouldn't have a profit margin if they had to sell the drug from day one at the same price as those people who are going to manufacture the generics now.

Developing drugs is a risk. You can get all the way to trials and then find out that your fancy new LDL drug gives 50% of the people who take it the hives or only works in 3% of the users. All the money you spent getting there is gone. People who fund that kind of risk deserve to get paid back for taking the risk, mostly because they won't take the risk unless they do.

Re:See. Patents/Copyright spur innovation.

[MightyYar]

First, kudos for keeping the discussion civil.

I disagree with some of your points, though. Specifically:

You _do_ realize that animals have lived on this planet millions of years without "paying" anyone. The universe provides everything you need to exist

Animals (including humans) spend a lot of time "subsisting". That is, chronically hungry or malnourished. Animals left to their own devices generally consume everything that they can, build up a large population, and then starve back to a more sustainable population. Healthy populations of animals tend to be healthy because some predator is culling the sick and old and generally keeping the numbers down. I don't think you want to look to the animal kingdom as any kind of a model for humans.

I'm sorry but EVERYONE has the right to life, regardless of the cost.

Everyone has the right not to have their life taken away, but no one has a right to unlimited, state-of-the-art healthcare. Money is just a way to quantify resources, and we don't have the resources to give everyone all the healthcare that they want, when they want it. You have to ration it. Different countries take different approaches. In the US, we have 3 different systems of healthcare and so we see wait lists, prioritization (like for organ transplants), restricted availability, and of course dollars. In some countries, they use restricted availability, age limits for certain procedures, and wait lists. And these are the rich countries. The point is, you have to mete out the health care somehow, and while it seems cold to say, "sorry, you can't afford it," I think it also sounds cold to say, "sorry, you are too old to have a kidney transplant." I'm not sure what the right balance is, but I'm willing to discuss it - but I think it is completely incorrect to say that everyone has a right to healthcare - I think that's more of a laudable goal, or an ideal to strive for, but not a right. You do have a right to die, though :)

Re:See. Patents/Copyright spur innovation.

[jedidiah]

Monopoly drugs are what's expensive. If you remove one of the justifications for absurd monopoly prices on drugs, you will likely save much more money in the long run than you spend on drug trials.

Besides drug trials represent an obvious conflict of interest if being carried out by a company that stands to profit greatly from the ensuing monopoly. Taking them completely out of the hands of the drug companies might not be a bad idea just for that.

Re:See. Patents/Copyright spur innovation.

[MightyYar]

I'll give you an example. A coal power plant sets up shop on the east coast of the US. It has no pollution controls at all, because this is pure capitalism in this example and the government doesn't require any. Prevailing winds are westerly, so all the pollution blows out to sea and no one gets sick and no one sues. Problem is, all that mercury is getting into the fish. It's impossible for anyone to prove this to a jury and sue that particular plant, so it just continues. Even if they could prove that, statistically, the plant was responsible for some of the mercury - they still would have a heck of a time proving harm. Capitalism will never solve this problem.

Another is food. Capitalism always has cycles of shortages and gluts. A shortage of hard drives because of a flood in Thailand is one thing, a shortage of food is quite another. Capitalism will never solve this problem, because constantly producing a glut of food would drive farmers out of business which of course leads to a shortage. One solution is for the government to come in and buy the glut and then destroy it - unless of course there is no glut! Then you get to use the food and thank the usually wasteful food program. Not the only solution, but it's a common one. The point is, capitalism won't work on it's own when it comes to staple foods.

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

Drugs come from... drug companies, not from universities, because drug companies have the billions of dollars to put a compound through clinical trials and the expertise to make the drugs usable.

And don't forget, they've got twice as much money for advertising those drugs as they have for researching those drugs and running those clinical trials.

Actually, I sold my Pfizer stock long ago, because in an era where medicine's costs are skyrocketing, share value remained pretty much flat. Or dropped.

After a while I noticed that the REAL drug development seemed to come out of small companies. Big Pharma (Pfizer and friends) were more interested in buying them out than in actual productive work of their own.

Liptor is the Drug From Hell as far as drug companies are concerned. Every attempt to replace it with something with a newer patent has exploded in their faces, as all the Lipitor "improvements" have been pretty darned dangerous, whereas Lipitor is fairly safe for most people.

Re:See. Patents/Copyright spur innovation.

[TheGratefulNet]

thank you.

lets always remember that if they can afford so much on advertising and marketing, SOMETHING IS WRONG and should be changed.

this is healthcare. its not some luxury item.

lets not forget this. its what makes us HUMAN, dammit.

healthcare is different. it is. if you don't understand that, you are a barbarian.

Re:See. Patents/Copyright spur innovation.

[lorenlal]

The clinical trials have to adhere to extremely strict regulations by the FDA.

Also, there is insane liability with drugs too. If you (by your suggestion) think that drug companies are at all interested in cutting some corners during testing and trials, you're clearly not considering the amount of money said company stands to lose if something bad were to happen. If you want to see a sample: http://drugclassactionlawsuit.com/

So, yea, there's huge risk in bringing something to market. I don't know what a good solution is yet, or if maybe moving the research/testing to the public sector is a good idea... But don't discount that the drug companies (the few that are still around) have plenty riding on making sure those trials.

Re:See. Patents/Copyright spur innovation.

[pz]

That's a nice Hollywood-inspired vision you have there.

Reality is that research costs money. A lot of money. Being passionate and driven, in the Hollywood sense, is largely irrelevant because that does not get you research dollars. Money for health-related research comes from the NIH, and only the NIH, to first approximation. Yes, there are other sources, but the NIH dwarfs them all. Sure, an extraordinarily motivated researcher might be able to convince George Soros to give him a few million dollars to pursue a multi-year plan on a new drug target, but that's the Hollywood fantasy again. The vast majority of biology researchers get their money from the standard NIH grant mechanism called an R01 (pronounced ARR-OH-ONE). That would be your tax dollars at work.

As another poster pointed out, that's only the first step. A drug target has been identified by university research. Now, the hard part begins where multiple animal models are tested in large scale, followed by Phase I clinical trials with a small cohort to demonstrate that the drug causes no harm, then Phase II trials with a slightly larger cohort to determine effective doses, then, perhaps, another animal study or two because the results didn't work as well as anticipated in humans, followed by Phase I again on a reformulated drug, then more research to figure out why there were horrible side-effects, back to Phase I, then Phase II, and, if the developer is lucky, Phase III. We're talking years after the initial discovery now, with lots of hospital costs, lots of salaries, and *then* the legal stuff starts with the FDA to get approval for general release. Next, lobbying starts on the insurance companies, especially Medicare and Medicaid, to cover treatment with the drug.

Put it this way, there is an entire industry focused specifically on clinical trials, and most drug candidates don't make it through. Because we've set the bar so high to get a drug approved, and the success rate is so low, there must be substantial reward for many people to justify the expense. One researcher having a dream is not enough, despite what Hollywood would have you believe.

Re:See. Patents/Copyright spur innovation.

[crunchygranola]

Not really. Everybody acts like sales and marketing are unimportant details. They are not. Products do not sell themselves, and no amount of disliking sales and marketing people is going to change that. Companies that ditch their highly-paid sales staff (some of whom will outearn the CEO/founder, especially in small companies) quickly find this out.

This response is completely upside-down: taking a serious problem that "free market fundamentalists" have created in the U.S., and treating it as if it is not only normal, but also inevitable and really a GOOD thing!

The fact that the U.S. dropped restrictions on drug companies on marketing prescription drugs directly to the public, thus becoming the only country in the world that allows it, is part of the reason that the cost of medicine in the U.S. has exploded.

The enormous ad expenditures are for direct marketing to the public. Except for the very safe drugs for commonplace ailments that are sold OTC public is not qualified to make judgments about the drugs they should take. Honest. They aren't. Doctors are paid to have that expertise. We don't need direct marketing to the public. No other nation needs it. Big Pharma didn't use to need it. But doctors they aren't immune to the pressure from their patients - nor are they completely immune to the absolutely fact-free, emotion-laden content of ads which they also see constantly (there used to be much stronger restrictions also on how Big Pharma could seek to debase the judgment of doctors directly - through perks that are just dressed-up kick-backs for prescribing costly drugs). None of this is necessary to practice good medicine - it undermines it in fact.

A classic recent example of how the marketing game is the drug Prilosec -- pushed incessantly by its patent holder until the day the patent expired. The next day no comment of this worthy drug could be found, now it was a new patented replacement virtually identical in effects called Nexium. Trying to push the now inexpensive generic Prilosec out of the public's (and doctor's) mind and replacing it with the needlessly costly Nexium did no benefit to the public or medicine. It was an ad campaign solely designed to keep medical costs high.

Yeah. We need lots more of that.

What?

[geekoid]

A patent is going to expire. The company responds with marketing and by lowering it's price.

That's just horrid~ Someone is working to hard to find ills.

What's that? there are going to create a generic version of the drug they created? OMG!!1!!!

Re:What?

[Caerdwyn]

Exactly. They never should have been allowed to create the drug or sell it in the first place. The whole idea of "whoever does the work is the one who should get the reward" is evil. Pharma companies should not be allowed to engage in research, earn profit, or do anything except bleed money into the pockets of lawyers and socialists. Anyone should be able to simultaneously cash in on another company's research and sue that company. Drugs happen by magic, and don't tell me otherwise; effort has nothing to do with it. Screw people with high cholesterol, they're old while entitlement-driven people are young, it doesn't affect the young so to hell with anyone except the young. I'm ENTITLED.

May you die of a heart attack for want of an effective drug.

Re:What?

[iluvcapra]

The company responds with marketing and by lowering it's price.

Right, but they're not lowering their price as much as the generic. They're negotiating deals with your insurance company so your co-pay for the name brand will be lower than generics, even though the rate the insurance company actually pays for brand-name Lipitor would be higher than the generic, so you save $5 on a copay but the insurance risk pool loses $50, because the drug company is insulating you from the underlying costs and distorting your buying decision.

It's classic drug company tactic- they'll hand out "coupons" or "drug benefit cards" that defray the excess cost of a brand-name copay over a generic copay, so if your brand-name copay on a drug is $40 and the generic is $15, Pfizer will pay you the $25 difference to buy the brand name. They can afford the difference because they're probably profiting over $100 on the bottle, you just don't see the cost to your insurance company at the point-of-sale, it gets turned into higher premiums. It's a big part of why prescription drug insurance is so expensive in the US, several states have banned manufacturer drug coupons and This American Life did a whole episode on it a year or two ago.

Re:What?

[leonardluen]

i think there is a story here. we should compare this expiring patent to the copyrights (which it appears never expire, as they just extend it any time it gets close)

So we see this patent expiring and the company that holds it is suddenly becoming more competitive to stay in business and the consumers are winning because of it.

now i wonder what the *iaa would do if their copyrights were starting to expire...i suppose they would have to do something to remain competitive, and the consumers would win because they would be able to get cheap media.

however the *iaa is lazy and don't want to have to do that extra work, and so instead they have fought to keep copyrights perpetual.

Re:If you take a *satin drug...

[toomanyhandles]

Don't buy your food in a box. Cook it yourself.

Re:Choosing the correct tactics

[MightyYar]

Sadly enough, The whole hospital pharmacy apparatus becoming completely automated and mechanized within the next 20 years.

LOL, why is that sad? You just scared the shit out of me about what the meat-based pharmacists are up to! :)

Re:This is not the way capitalism works.

[Anonymous Coward]

You make an interesting point, and I agree that we don't hear about those huge discoveries very often, but I worry that you have been horribly misled.

I am a medical student, and I've spent years in basic science research, studying cancer and genetics. While certain aspects of healthcare aren't perfect (distribution of federal research funding, ill-gotten pharmaceutical gains, etc), I honestly believe that medicine has come a long, long way and continues to advance at fantastic pace.

To address your specific comment:
- There is no vaccine or cure for "the common cold", and likely, there never will be one, partly because "the common cold" can be caused by any of dozens of different pathogens. And by itself, rhinovirus, the oft-cited culprit, mutates far too quickly to make a cure or vaccine achievable.
- A cure for Alzheimer's: Alzheimer's is still not understood fully enough to yield curative treatment, but research on the disease, especially on its genetics, has come VERY, VERY far. You would be amazed if you took a look.
- Parkinson's: Sure, no cure on this either. But again, you would be amazed at the research that's been done. And you would be even more amazed to see what treatments are out there. In med school, we've met patients who have undergone treatment for Parkinson's, and their lives had improved significantly with little inconvenience. One treatment: a little surgically-implanted a little remote-control patch in your brain that supplies dopamine to the right shots, helping patients to regain independence and control their movements again. Absolutely incredible.

It's like you picked out random things about which medicine's understanding is still fuzzy, and you used them to illustrate that medical research is completely stagnant. I disagree fully. I dare you to go back 20 years and get infected with HIV. Treatment of that devastating infection has made astounding progress in just a couple of decades. Go back a little further, before the smallpox vaccine. Compare current treatments for diabetic retinopathy or macular degeneration with those available maybe 15 years ago. Check out the strides - the LEAPS - that have been made in cancer genetics in just 20 years and how they've improved the speed of diagnosis and treatment of cancer, and have significantly improved prognosis.

Medical science isn't stalled. Yes there are complicating factors. But to say it has stalled is to ignore the massive efforts and accomplishments of scientists who have significantly improved everyone's health.

Of all time?

[rossdee]

Surely Alcohol is the best selling drug of all time