The healthcare industry is ever changing, which can greatly be attributed to the way technology has aided in its advancements. For the average person, the healthcare industry, specifically insurance coverage on prescriptions, can be an overwhelming and convoluted experience. Many consumers are often prescribed a medication, only to find out that the medicine is not covered under their health insurance policy. Understanding the pharmaceutical market and the patents on drugs can give consumers a bit of insight into how pricing for medications is determined.
Politics play a large role in the pharmaceutical industry. Consumers want and need costs to stay low and often turn to the government to help regulate this. At the same time, pharmaceutical lobbyists have a huge stake in the industry and try to push their agendas through. In addition to the politics, a huge factor in the cost of pharmaceuticals are the patents held by large companies on well known drugs. These patents allow large pharmaceutical companies to maintain rights to many well known drugs for twenty years.
While many of those twenty years will be used for development and research of the drug, many companies have ten solid years of making a profit off the drug. So you may be asking, how do this affect me? In the next several years, more than $17 billion worth of patents for well known drugs will be expiring, causing many changes in the market. Pharmaceutical companies have a huge incentive to protect these patents, which in turn directly affects the availability and cost of certain prescription drugs.
When drug patents expire, generics are able to enter the market, causing costs of certain prescription drugs to plummet due to competition. This is a huge benefit to the consumers. As you can imagine, pharmaceutical companies want to find ways to ensure they do not lose large amounts of revenue when the patent expires. To accomplish this, drug companies will try different approaches, which in turn has a direct affect on consumers who need the medication.
One approach is licensing the drug to competing generic companies, allowing the drug to be made a lower cost while still generating revenue for the original company. This greatly benefits the consumer, as the same medicine is being made at a much lower cost. However, companies, will often times drop the drug altogether or come up with new, innovative approaches to the drug to protect its patent. Unfortunately for consumers, this keeps the drug protected against generics, as well as the price high.
Pharmaceutical companies have a great incentive to keeping patents in order to protect their product against competition. In turn, pressuring consumers to purchase an expensive brand over generic. As the industry continues to change and patents approach their expiration dates, your own personal medications may be affected. Keep an eye out for price adjustments in the near future on your prescription medications, hopefully benefiting your pocket book!