BCBS study: generic delays could cost consumers billions

Drug Store News,  May 20, 2002  by Diane West,  James Frederick

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WASHINGTON -- Patent pile-ons, legal loopholes and dragged-out disputes used by pharmaceutical companies to monopolize drug sales could cost consumers billions of dollars in additional health care costs, according to a study sponsored by the Blue Cross Blue Shield Association.

"We're looking beyond benefit design to address skyrocketing drug costs," BCBS president Scott Serota said at a Capitol Hill news conference last month. "We believe one of the best ways is to improve access to safe and equally effective generic drugs."

University of Minnesota researcher Stephen Schondelmeyer, Pharm.D., Ph.D., drew a connection between top-selling drugs and their patent protections over the last two decades. "We've found that as the sales potential goes up, more patents for more periods of time go up, too," Schondelmeyer said. "And it's not just the active ingredient that is patented, but there are patents on dosage forms, new indications for use and a variety of other things."

Staggered patents could potentially keep generic copies of blockbuster drugs such as Prilosec off the market for another 30 years. "If a billion-dollar-a-year drug delays generic entry for just one year, the consumers' cumulative loss would be about $50 million," Schondelmeyer said. He also noted that there are about 30 such drugs facing patent losses in the next five years. If each extended their patent by one year, Schondelmeyer estimates consumers would spend an additional $8 billion on prescription drugs than they would if generics were available.

Serota said BCBS plans, which collectively insure 1-in-4 Americans, will build upon the generic drug successes of regional plans--such as providing financial rewards to pharmacies that improve generic substitution rates--an will join the Generic Pharmaceutical Association in efforts to revise the Hatch-Waxman Act, which they say branded companies exploit. "We want to encourage the branded companies to focus their efforts on true product innovation and away from legal loophole innovation," GPhA president Kathleen Jaeger said.

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