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Title    The Cheerios Theory of Branded Medicine
Date    Tuesday August 23 2016, @10:43PM
Author    janrinok
Topic   
from the it's-business dept.
https://soylentnews.org/article.pl?sid=16/08/23/1354243

quietus writes:

It has the same active ingredient, so it should work the same, but if someone says 'I want Cheerios, not Walmart-os', then why should they not get what they're paying for? (David Maris, pharmaceuticals analyst at Wells Fargo, as quoted in Staying Power, David Crow, Financial Times [Log in required], Aug 22.

Discovering a drug and bringing it to market can take more than 10 years and costs on average $2.6bn per medicine. Typically around five to seven years after, the exclusive rights on the discovery expire, and generic copycat versions quickly flood the market. Prices are slashed to super-cheap, and then for all time and eternity, society benefits greatly. Or, in the words of Pfizer's CEO Ian Read during an investor call: "The price of medicines drop significantly once the patent expires... Today, about nine out of ten prescriptions in the US offer generic drugs, which lead to significantly reduced costs in the healthcare system."

A recent Financial Times analysis doesn't completely agree though. Prices of branded medicines aren't slashed once the patent expires. They actually often sharply increase.

Before companies get to that phase however, a whole slew of other tactics have been used to maintain exclusivity. Many make small changes to a drug, then renew the patent. This is known as evergreening. Others "pay for delay" -- offering financial incentives to the generics producers to bring their alternatives to market more slowly. And once the generics get to market, pharma companies change tactics by attempting to stop patients, doctors and pharmacists from switching.

The end result is price differences between generics and brand medicines which are somewhat strange for a free market: Wellbutrin (bupropion, 150 mg) [Valeant]: $36 per pill versus $0.46 for the generic [bupropion]; Lipitor (atorvastatin 20mg) [Pfizer] 10.49 versus 0.13, Abmien (zolpidem 5mg) [Sanofi] 15.52 versus 0.02, Prozac (fluoxetine 20mg) [Eli Lilly] 11.39 versus 0.03, Xanax (alprazolam 1mg) [Pfizer] 8.14 versus 0.05 and Sarafem (fluoxetine 20mg) [Allergan] $15.98 versus $0.03 per pill.

There must be lot of people who prefer Cheerios over Walmart-os.


Original Submission

Links

  1. "quietus" - https://soylentnews.org/~quietus/
  2. "Financial Times" - http://www.ft.com/cms/s/0/d7b1c59e-65fb-11e6-a08a-c7ac04ef00aa.html#axzz4I9wza6Yp
  3. ""pay for delay"" - https://www.ftc.gov/reports/pay-delay-how-drug-company-pay-offs-cost-consumers-billions-federal-trade-commission-staff
  4. "attempting to stop" - https://www.crestor.com/cholesterol-medicine/ask-for-your-crestor.html
  5. "Original Submission" - https://soylentnews.org/submit.pl?op=viewsub&subid=15453

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