Is big pharma in trouble as patents expire?

The New York Times published an article earlier this month on the financial problems some drug companies are facing due to the expiration of the patents on blockbuster drugs. Once a patent expires, competitors can begin selling generic drugs at a fraction of the cost. These generics eat into the profits of the name-brand, patented drug.

Should we feel sorry for the drug companies? Consider three things: first, the article reports that "Americans fueled the research engine, spending much more per capita on prescriptions than in any other nation, and paying the highest prices for prescribed medicines." Second, the pharmaceutical companies have billions in cash reserves, much of that borne on the back of regular Americans. And third, U.S. law gives pharmaceutical companies up to 5 additional years of exclusive use beyond the term all other patent owners get. Ordinary Americans have struggled through the latest recession, and few of us have $20 billion in cash lying around to get us through the rough times. I see families every day who have to choose between paying a light bill or buying much-needed prescription medications. So, pardon me if I don't feel too sorry for the drug companies that gouge American families for hundreds or thousands of dollars a month for medication yet virtually give that same medication away to Canadian and European citizens.

With all the billions the drug companies have lying around, they have plenty to spend lobbying Congress to pay for expensive drugs. Problem is, Congress helped fund the development of many of these drugs. It seems like to me that federal deficits could be substantially reduced if we did two things. First, we could invoke the Bayh-Dole Act so the government pays less for prescription drugs for which it sponsored research. And two, we could reduce the patent terms for prescription drugs so they don't get preferential treatment. These things will be tough given big pharma's lobbying power, but they would help get our government out of debt and help the wallets of ordinary Americans.

How much is a year of life worth?

A recent report by the Associated Press attempted to answer this question by looking at the costs of prescription drugs. That report concluded the cost of extending the life of terminal cancer patients by just one year can be as high as $800,000. That's how much Medicare and insurance companies are willing to pay for drugs that keep cancer patients alive. A more commonly-seen figure is $50–100,000, which is still quite a bit of money to most Americans.

This question — how much is a year of life worth? — is a touchy subject in the practice of law. Every single one of my clients who have been injured, or who lost a family member, wouldn't take any amount of money if they could just put everything back to the way it was before the wrongful occurrence. That can't happen, so every case involving personal injury or death requires a jury to place a dollar amount on the value of human life. That's a hard thing to do, but our civil justice system has no other way of correcting wrongs. There is no "eye for an eye, tooth for a tooth" justice in civil cases. Making someone pay for their mistakes comes down to just that: money is the only remedy for physical harm permitted in our civil courts.

Doctors for public health and safety, against tort reform

Doctors are generally thought to be in favor of tort reform, but for many MD's this is a knee-jerk reaction to medical malpractice lawsuits. In truth, medical errors are believed to cause up to 98,000 deaths annually, according to a 2003 article in the Journal of the American Medical Association. That puts medical errors in the top ten causes of death in the U.S.

Around 1% of all hospital patients become victims of malpractice, and 5% of physicians are responsible for half of the medmal cases filed in this country. Just 3% of malpractice victims actually file claims, and doctors and hospitals avoid paying for 80% of the harm they cause to malpractice victims. See http://www.centerjd.org/cjrg/Numbers.pdf for more statistics.The statistics prove that the notion that malpractice claims are out of control is an advertising gimmick that permits malpractice insurers to price-gouge doctors.

Some doctors see through the insurance industry propaganda. The current and former Editors of the New England Journal of Medicine ("NEJM"), which is the oldest continuously published medical journal in the world, filed a "friends of the Court" brief in a 2008 U.S. Supreme Court case. This case was against a pharmaceutical company for releasing a dangerous drug on the market, despite having knowledge that the drug had dangerous side effects. The drug company withheld information from the Food & Drug Administration about these dangerous side effects. The plaintiff was a woman who was administered the company's drug and who had her arm amputated as a result. A jury awarded the plaintiff $7.4 million dollars in damages.

The Editors of the NEJM, who are highly educated doctors, reviewed several cases in which drug companies "equated increased warnings with a loss of sales, [giving them] an incentive to delay warnings as long as possible... [C]ertain pharmaceutical companies have already proven themsleves unwilling to prioritize safety over profits, even when faced with the threat of civil liability." The Editors argued that the jury's verdict should stand because a robust tort system is required to effectively monitor drug companies and to improve the lives of injured patients and their families. The Editors also believed that elimination of tort claims would "threaten this nation's public heath."

Well-educated and highly-respected doctors who have studied tort reform believe that a strong tort system is needed to protect patients. That should speak far more loudly than propaganda designed to pad the profits of drug manufacturers and insurance companies.