Brand-name Pharmaceutical Companies Research Articles

Multinational Pharmaceutical Companies Shortchange Canada in Research and Development Investments: Is It Time to Pursue Other Options?

In 1987, the government passed legislation to protect brand-name pharmaceutical firms against competition from generic drug brands in exchange for economic investment in Canadian pharmaceutical research and development (R&D). Since 2002, brand-name pharmaceutical companies' R&D investments have fallen short of their commitment, while Canadians now pay the fourth highest drug prices of all the Organisation for Economic Co-operation and Development member countries. In this article, we examine the degree to which brand-name pharmaceutical companies have fallen short of their promises, discuss whether a patent policy is the best strategy to secure Canadian pharmaceutical R&D funding and propose practical alternatives to this arrangement.

Horizontal Shareholdings and Paragraph IV Generic Entry in the U.S. Pharmaceutical Industry

The Federal Trade Commission frequently files complaints against “pay-for-delay” settlements between brand-name pharmaceutical companies and generic-drug manufacturers, the latter of which challenge the monopoly status of patent-protected drugs. I document than when the top 20 generic shareholders have more substantial financial interests in the brand, then the likelihood that the brand enters into a settlement agreement with the first generic to challenge the brand goes up. The result of such a settlement is a payment from brand to generic, in exchange for the generic’s delayed entry. Only after the first generic’s entry, a 180-day period of marketing exclusivity for that particular generic starts. Other generics can only market their drugs after that period expires. As such, the settlement between brand and the first generic extends the brand’s monopoly position. I conclude that horizontal shareholdings facilitate coordination between brand-name patent holders and generic challengers in response to the threat of entry.

The Anticompetitive Effects of Common Ownership: The Case of Paragraph IV Generic Entry

Brand-name pharmaceutical companies often file lawsuits against generic drug manufacturers that challenge the monopoly status of patent-protected drugs. Institutional horizontal shareholdings, measured by the generic shareholders' ownership in the brand-name company relative to their ownership in the generic manufacturer, are significantly positively associated with the likelihood that the two parties enter into a settlement agreement in which the brand pays the generic manufacturer to stay out of the market.

Regulatory exclusivity protection for undisclosed test data in China: an innovative approach to implementing the TRIPS Agreement

Regulatory exclusivity, the TRIPS-plus protection for undisclosed test data, is considered as the principal means to extend market protection for brand-name pharmaceutical companies. When China joined the World Trade Organization in 2001, it promised to enact new laws or regulations that will comply with article 39.3 of the TRIPS Agreement. China's choice of implementing the TRIPS Agreement through regulatory exclusivity resulted mainly from intrinsic demands for China's strategy of innovative-driven development, and partly from the pressure of China-US trade disputes. There are two categories of regulatory exclusivities under China's laws. One is the market exclusivity for New Drugs and Traditional Chinese Medicine. The other is the data exclusivity for Innovative Drugs, Orphan Drugs, Paediatric Drugs, Innovative Biologics; and a ‘Generic Exclusivity’ for the first generic drug company that succeeds in challenging weak patents of pharmaceutical products.

The High Cost of Insulin in the United States: An Urgent Call to Action

The High Cost of Insulin in the United States: An Urgent Call to Action

Institutional Horizontal Shareholdings and Generic Entry in the Pharmaceutical Industry

Brand-name pharmaceutical companies often file lawsuits against generic drug manufacturers that challenge the monopoly status of patent-protected drugs. Institutional horizontal shareholdings, measured by the generic shareholders' ownership in the brand-name company relative to their ownership in the generic manufacturer, are significantly positively associated with the likelihood that the two parties enter into a settlement agreement in which the brand pays the generic manufacturer to stay out of the market. Horizontal shareholdings are also positively associated with the brand's daily abnormal stock returns around the settlement agreement. Generic manufacturers who settle with the brand-name company are more likely to delay the sale of generic substitutes if they have higher horizontal shareholdings with the brand-name firm. These delays preclude other generic firms from entering the market.

The Need for a Patent-Centric Standard of Antitrust Review to Evaluate Reverse Payment Settlements

Reverse payment settlements have ignited a firestorm debate among all affected parties: consumer groups, brand-name pharmaceutical companies, generic manufacturers, pharmaceutical wholesalers and retailers, lawmakers, executive agencies, and the federal courts. The Federal Trade Commission (“FTC”) has waged a decade-long battle against such private settlements of pharmaceutical patent litigation as illegal market-sharing agreements, with skirmishes among the circuits trending in favor of the settling parties until recently. The Third Circuit’s recent decision in In re K-Dur Antitrust Litigation unsettled this trend, and the Supreme Court granted the FTC’s petition for a writ of certiorari in a separate case on the issue on December 7, 2012.A reverse payment settlement is an agreement ending a pharmaceutical patent infringement suit under which a putative patent holder agrees to compensate an alleged infringer, typically a generic firm, to settle a patent infringement case. In exchange, the alleged infringer agrees not to challenge the patent holder’s patent or sell a generic version of the drug for a stated term. Because the payment flows from the plaintiff to the defendant, it has been called a “reverse” payment.This Note argues that any standard of antitrust review for reverse payment settlements must involve an evaluation of the patent’s strength at the time the patent holder and generic firm enter into a settlement. The Court of Appeals for the Federal Circuit is the court of competent jurisdiction to review a district court’s evaluation of a patent’s strength. Part I reviews reverse payment settlements generally and the statutory schemes that promote their emergence. Part II presents three approaches the circuit courts have adopted to review reverse payment settlements: per se illegality, a rebuttable presumption of illegality, and the scope of the patent test. Part III argues that any standard of antitrust scrutiny must consider the patent’s strength at the time of the settlement — an approach no circuit has yet adopted — and that the Federal Circuit is the proper appellate court to review patent strength.

Drug patents: the high price of watchdog litigation

Not all patents are created equal. Actually, if you were to ask someone in the generic drug business, you’d likely get an earful about patents owned by brand-name pharmaceutical companies that are weak, questionable or shouldn’t have been granted in the first place. “In the pharmaceutical

Drug patents: innovation v. accessibility

Views on patent protection for drugs tend to align with opinions on the value of innovation. Brand-name pharmaceutical companies and international trade enthusiasts generally advocate for stronger intellectual property (IP) laws. Without the profits allowed by patent monopolies, they argue,

Pharma Deals Divide High Court

The Supreme Court appeared unsure last week about whether brand-name pharmaceutical companies can pay potential generic competitors to keep their cheaper products off the market for a certain number of years. The issue is at the heart of a case before the high court involving AndroGel, a treatment for low testosterone in men, and an agreement between its original developer and a company that wanted to market a generic copy. The drug industry says “pay for delay” deals do not delay generic drugs, but the federal government disagrees. Lawyers representing the Obama Administration argued before the Court that the deals violate federal antitrust law and result in higher drug prices that cost consumers billions of dollars each year. “It’s an agreement not to compete,” Deputy Solicitor General Malcolm L. Stewart told the justices. “Agreements of this sort should be treated as presumptively unlawful.” But several justices called that approach unnecessarily ...

Waiting is the Hardest Part: Why the Supreme Court Should Adopt the Third Circuit's Analysis of Pay-for-Delay Settlement Agreements

In March 2013, the U.S. Supreme Court will hear Federal Trade Commission v. Watson Pharmaceuticals, Inc., giving the Court the opportunity to answer the multibillion-dollar question of whether brand-name pharmaceutical companies violate antitrust laws when they pay generic drug manufacturers to delay entering the drug market. The Supreme Court’s decision in this case could have a significant impact on rising health care costs in this country. The high cost of prescription drugs has put crippling economic pressure on the U.S. health care system. In 2010, forty-eight million Americans sacrificed filling essential drug prescriptions due to cost - often leading to life-threatening consequences and further increased health care expenses. Although many factors contribute to high drug prices, collusive settlements between brand-name pharmaceutical companies and generic drug manufacturers play a major role by presenting a barrier to lowering drug costs. Brand-name pharmaceutical companies have long been settling patent litigation by paying generic manufacturers large sums of money to drop patent lawsuits, thereby delaying generic drugs from entering the market. These settlement arrangements, known as “reverse payments” or “pay-for-delay” agreements, derive from the regulatory framework of the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Act. Though Hatch-Waxman’s goal was to increase generic drug competition in the pharmaceutical drug market while still fostering patent innovation, reverse payment settlements largely prevent timely generic drug entrance into the marketplace. As a result, drug prices remain inflated and American healthcare consumers bear the burden. According to the Federal Trade Commission (“FTC”), these anticompetitive agreements, which rose to a record number in 2012, cost consumers $3.5 billion per year. Due to the complex intersection of the regulatory scheme of Hatch-Waxman, antitrust principles, and patent law, circuit courts have reached divergent conclusions on whether reverse payment settlements are anti-competitive. Three circuit courts applied antitrust scrutiny to find that the reverse payments were unreasonable restraints of trade and violated Section 1 of the Sherman Act. Conversely, three circuit courts reasoned that a reverse payment was legal so long as it remained within the “scope of the patent.” In fact, last year, the Third Circuit reviewed the same settlement agreement as the Eleventh Circuit did in 2005 and yet reached an opposite conclusion. While the Eleventh Circuit applied the scope of the patent test to find that the payments were legal, the Third Circuit expressly rejected the scope of the patent test and found that the payments constituted prima facie evidence of an antitrust violation. Beyond settling the differences in opinion among the lower courts, the U.S. Supreme Court decision will have significant implications for the pharmaceutical industry and American consumers. This Comment contains four Parts. Part I of this Comment provides background information regarding the reverse payment settlement problem, including Congress’s intent for passing the Hatch-Waxman Act, the Act’s basic mechanisms, principles of antitrust and patent law, and the first two cases to deal with reverse payments stemming from the Act. Next, Part II discusses how the Eleventh Circuit, Second Circuit, and Federal Circuit applied the scope of the patent test to reverse payment settlement agreements, and how the Third Circuit rejected the test. Part III then analyzes these circuit court decisions, reasoning that the Third Circuit properly considered reverse payments as prima facie evidence of an unreasonable restraint of trade. Finally, Part IV proposes that the Supreme Court should adopt the Third Circuit’s reasoning and considering additional factors regarding the reasonableness of reverse payments.

Trade Agreements and Pharmaceutical Patent Protection: Implications for the Governance over Pharmaceutical Products in Canada

This paper was prepared for a course on Canadian health policy. Its purpose is to expose the harmful ramifications of international trade agreements on the pharmaceutical market in Canada and the governance surrounding this market. This paper will explore the various implications that trade agreements have on the affordability of drugs, the strength of intellectual property protection, and the transfer of authority and influence from government to “Big Pharma.” This paper will unravel the reality that trade agreements are not beneficial to the Canadian people looking to access an affordable pharmaceutical market, but rather, act quite contrary to this. Facts will show that trade agreements work to put money into the pockets of large brand-name pharmaceutical companies in the forms of billions of dollars of revenue and profit. This paper will encourage readers to question the feasibility of extending patent legislation for brand-name pharmaceutical products, the increasing role of trade agreements and the pharmaceutical industry in Canada, and the substitutability of brand-name drugs over cheaper generic alternatives.

Provinces and territories agree to work together to purchase generic drugs and to expand use of bulk purchasing for brand-name drugs

Canada's provincial and territorial premiers have announced plans for a national competitive bidding process to purchase generic drugs and to expand use of group pricing for brand-name drugs. The announcement was made on July 26, 2012, during a meeting of the Council of the Federation in Halifax. Bulk purchasing for generics has become a necessity, according to a report from the Council's Working Group on Health Care Innovation. “Canadian prices on 64 generic prescription drugs are 90% higher than American prices and that's the gap were going to seek to close,” Saskatchewan Premier Brad Wall said at a July 26 news conference; he co-wrote the report with Prince Edward Island Premier Robert Ghiz. The provinces and territories — with the exception of Quebec — will begin by jointly purchasing 3 to 5 generic drugs, with prices established through competitive tendering. These pharmaceuticals are to be identified in the fall and the bulk purchasing is to begin in the spring of 2013. Pharmacists support measures to ensure the financial sustainability of health care but they have concerns about bulk purchasing, says Dr. Jeff Poston, executive director of the Canadian Pharmacists Association (CPhA). “Our concern is the risks to the supply chain that get created through competitive tendering, where you can end up with a sole supplier and potential shortage issues, says Dr. Poston. Noting that governments have already significantly reduced generic drug costs through new pricing policies, he says the focus on further reductions is somewhat misplaced and short-sighted. “They need to focus more on patient care and outcomes from drug therapy. This preoccupation with price neglects the need for investment and for improving safety and quality — ultimately saving money in the broader health care system.” National bulk purchasing with a tendering process is the best approach for generic drugs, according to Marc- Andre Gagnon, assistant professor at the School of Public Policy and Administration at Carleton University in Ottawa and an expert adviser with EvidenceNetwork.ca. “Many countries are purchasing in this way and they manage to get amazing rebates,” says Dr. Gagnon. “I am skeptical, however, about the premiers' plans to accelerate and expand bulk purchasing of brand-name drugs. That's where the real money is — generic drugs are only about 25% of drug expenditures.” In September 2010, the provinces and territories announced a pan-Canadian purchasing alliance to purchase the most expensive brand-name drugs. Since that time, Dr. Gagnon points out, only 2 products have been purchased that way. Achieving significant savings on brand-name drugs will be very challenging through joint purchasing alone, he says. For the past few years, the brand-name pharmaceutical companies have employed a global pricing strategy, in which they establish an “official price” for prescription drugs and negotiate rebates for individual purchasers. They did this after the US government agreed that its Medicare plan would always pay the official price, so there is an incentive to keep that price artificially high, explains Dr. Gagnon. “In Canada, most provinces have focused on standalone agreements for costly brand-name drugs, in which they list the official price on the formulary but secure confidential rebates for the public drug plan,” he says. “As soon as it is listed in a formulary, it is listed in every private drug plan in the province — and they don't benefit from the rebates. And patients paying out of pocket also have to pay the full official price.” Patients covered by the public plans also have co-payments and deductibles based on the official price. “It also puts smaller provinces at a disadvantage because they don't have the populations to secure the same savings as the larger provinces,” he adds. “There is a huge problem in terms of equity here between provinces.” It appears that the provinces and territories seek to negotiate on the official price of the drug, says Dr. Gagnon. “With the global pricing strategy, drug companies will be very reluctant to touch the official price. I don't think this is the best way to get high rebates.” The only way to secure significant savings on brandname drugs, he says, is to implement a national pharmacare program. He points to New Zealand, where the brand-name pharmaceuticals are 51% of the cost of those in Canada. “In New Zealand, the reason it works properly is that they do have a national pharmacare program, so when they purchase drugs they do so for all New Zealanders. Under a national program, we can eliminate playing of one province against the others. And the drug cost savings would be enough to actually fund the national drug plan.”

PAY FOR DELAY

AS PART OF ITS EFFORT to slash health care costs, the Obama Administration is urging Congress to stop brand-name pharmaceutical companies from paying their generics rivals to keep lower priced equivalent medicines off the market. The antitrust arm of the Federal Trade Commission (FTC) has been battling these agreements, saying they enable drugmakers to preserve their monopolies on certain products and cost consumers hundreds of millions of dollars in higher prescription prices. “The enormous costs that result from unwarranted delays in generic entry burden consumers, employers, state and local governments, and federal programs already struggling to contain spiraling costs,” FTC Commissioner J. Thomas Rosch told the House Energy & Commerce Subcommittee on Commerce, Trade & Consumer Protection at a recent hearing. Congressional action to prohibit these “pay for delay” agreements between brand manufacturers and their generics competitors is “both appropriate and timely,” Rosch said. “Agreements to eliminate ...

Analysis of Manufacturing Costs in Pharmaceutical Companies

In the pharmaceutical industry, costs attributed to manufacturing are a major part of a company’s total expenses. In this paper, trends in various expense and income categories of pharmaceutical companies have been analyzed with particular emphasis on manufacturing costs to gain an insight into their relationships and how they may differ among types of pharmaceutical companies such as brand name, generics, and biotechs. The study includes data published in the annual reports of leading pharmaceutical companies from 1994 to 2005. Twenty-two pharmaceutical companies were selected based on the annual revenues. The set was further divided into three groups: brand names, generics, and biotechs. The analysis shows that, between 1994 and 2005, manufacturing costs (as a percentage of total sales) are different for the three groups of companies listed above. Additionally, each group of companies differs in how savings are leveraged strategically. The data on brand-name pharmaceutical companies also indicate that there is a strong correlation between the reduction of the cost of goods sold (COGS) and the increase in R&D expenditure. This suggests the validity of Vernon’s theory that for brand-name companies, a reduction in COGS will likely have a positive impact on investments in R&D, presumably resulting in much needed innovations and future health benefits for the society.

Strategic Planning in the US Pharmaceutical Industry: A National Study

The purpose of this study was to investigate the current state of strategic planning in the United States' pharmaceutical industry. Information specific to the strategic planning process in the industry was collected and analyzed. Of the original 142 companies solicited, 52 companies responded. The respondents represented both generic and brand name firms. Drug firms used a wide variety of techniques in their strategic planning processes. Non-quantitative techniques were found to be favored over quantitative methods. The actual strategic planning process was found to be consistent throughout the industry, although strategic planning was carried out to a greater extent by brand name pharmaceutical companies. Further analysis revealed the size of pharmaceutical companies displayed a strong positive correlation to strategic planning. Additionally, a significant positive correlation between industry sector and formal planning was identified. A statistically significant difference was noted in planners' opinio...