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As Techdirt recently discussed, the drug pipeline is running dry, as Big Pharma’s patents are beginning to expire, and the drug companies are freaking out. For years they have been spending more money on research and testing and getting fewer results. This year alone they are going to have 11 patents expire on drugs that bring in approximately $50 billion in revenue to the big pharma firms. Of course, the flip side to this is that consumers can start saving about 95% on the price of those drugs, as generics hit the market. The drug companies have gotten to a point where the incremental increases in efficiencies are so small as to be meaningless. What is coming is more personalized and targeted treatments for diseases — treatments that do not require bulk production of a specific chemical, but individual testing and personalized care, and not lifetime treatments and repeat sales, but cures. The treatments will be expensive to begin with, but they will become less expensive over time. The business model of healthcare is about to change dramatically, and Big Pharma needs to do something to maintain their profits. Unfortunately, they seem to have chosen the path of regulating the competition out of existence, rather than competing and innovating.
One way the drug companies have been coping is to repackage and rebrand health food supplements. Drugs like Lovaza, which is nothing more than the fish oil you can get in health food stores, and lovastatin which has been in use for roughly a thousand years (800 AD) in the form of red yeast rice. In the case of lovastatin, the FDA banned the supplements because they are “identical to a drug and, thus, subject to regulation as a drug.” That is very convenient for the drug company, which now charges monopoly rents on the product — which can increase prices at ridiculous levels.
More recently, the FDA banned 500 prescription drugs that had been on the market and working for years. To be fair, it was really 50-100 drugs (pdf), made by different companies, but that just highlights how there was actual competition in the marketplace for these drugs, which has now been removed. For all of the drugs, there is either a high-priced prescription version, or all the small manufacturers have been removed, leaving a virtual monopoly for one or more larger companies. This process began in 2006 when the FDA decided to remove marketed unapproved drugs (pdf).
The reasoning is that these drugs weren’t ever technically “approved” by the FDA. While the FDA has been around for about a century, the business of having the FDA first approve drugs before they could go on the market came about closer to fifty years ago, and a bunch of “unapproved drugs” that were in common usage before that never got approved. The FDA is targeting many of those, even if they have a long history in the marketplace. Conveniently, of course, there always seems to be a pharma company with a monopolized substitute ready.