Pharmaceutical Industry Patent Assessment
Patents are a key element of Intellectual Property and provide a competitive edge to the pharmaceutical industry. The exclusive property rights provided by patents restrict competition in production and sales of medicine allowing companies to charge higher prices without concern for competition. The global standard of twenty years from the application date protecting the company’s significant research and testing investment. This is standard is important because it can take 10-15 years to develop a single product. Pharmaceutical industry patents also have tremendous impact on health care policies due to their influence on the cost of medicine. A new medication can cost in the billions of dollars requiring pharmaceutical companies to incur significant risk. The patent mitigates that risk encouraging medical companies to pursue new, innovation medicines that are essential to medical advancements.
The pharmaceutical industry grew rapidly from the early 90’s until 2008. Blockbuster drug sales produced large revenues for their companies leading this period of growth. However, events in recent history have begun to impact the industry and the future of pharmaceutical patents. The 2008 financial crisis significantly impacted growth as demand of medicine decreased. This economic recession, combined with multiple key blockbuster drug patents expiring in the last 4 years, changed and continues to impact the future of the pharmaceutical industry and new drug innovation. Approximately 81 branded drugs expired 2010-2013 ( ) including 30 blockbuster drugs each previously generating over a billion in sales annually. This recent loss of pharmaceutical sales is impacting the drug company’s profit margins. The patent loss is also opening the door to generic drugs from competitors. This increasing competition will drive down the price of these specific drugs further impacting funding for future innovation and research. The pharmaceutical companies are facing a dilemma in filling this revenue void forcing them to create new strategies for innovation while competing in the growing generics market. Generics market growth is keyed by national healthcare cost containment. Governments everywhere would like to see use of a cheaper product over their higher original drug product. The market for generic drugs has shown strong growth between 2008 and 2013 generating over $100 billion in sales annually since 2008 ( ).
Recent health care reform has also had a dramatic impact on the health industry. The Affordable Care Act (ACA) became law in 2010 with intent to increase health care protection for consumers. The ACA reforms does impact pharmaceutical companies with a deal reached to reduce the benefits gap in Medicare Part D plans. Key pharmaceutical company impacts include
an annual fee to help fund the ACA, regulation of generic drugs, and an exclusive 12 year timeframe for brand name drug sales. A...