Rising Health Care Costs and Life-Cycle Management in the Pharmaceutical Market

Aaron Kesselheim discusses Natalie Vernaz and colleagues' paper on the effects on health care costs of “evergreening” strategies pursued by drug manufacturers. Please see later in the article for the Editors' Summar

Specialty drugs: a distinctly American phenomenon

Various stakeholders in the pharmaceutical supply chain assign the specialty label to drugs on the basis of a combination of several unrelated factors, including whether a drug treats a rare condition. But the single most common feature of specialty drugs is high cost

Clinicians’ Contributions to the Development of Coronary Artery Stents: A Qualitative Study of Transformative Device Innovation

Background: Medical device innovation remains poorly understood, and policymakers disagree over how to incentivize early development. We sought to elucidate the components of transformative health care innovation by conducting an in-depth case study of development of a key medical device: coronary artery stents. Methods and Findings: We conducted semi-structured interviews with the innovators whose work contributed to the development of coronary artery stents who we identified based on a review of the regulatory, patent, and medical literature. Semi-structured interviews with each participant covered the interviewee’s personal involvement in coronary artery stent development, the roles of institutions and other individuals in the development process, the interplay of funding and intellectual property in the interviewee’s contribution, and finally reflections on lessons arising from the experience. Transcripts were analyzed using standard coding techniques and the constant comparative method of qualitative data analysis. Conclusions: We found that the first coronary artery stents emerged from three teams: Julio Palmaz and Richard Schatz, Cesare Gianturco and Gary Roubin, and Ulrich Sigwart. First, these individual physician-inventors saw the need for coronary artery stents in their clinical practice. In response, they developed prototypes with the support of academic medical centers leading to early validation studies. Larger companies entered afterwards with engineering support. Patents became paramount once the technology diffused. The case of coronary stents suggests that innovation policy should focus on supporting early physician-inventors at academic centers

Transformative Models to Promote Prescription Drug Innovation and Access: A Landscape Analysis

The patent-based pharmaceutical innovation system in the US does not incentivize the development of drugs with the greatest impact on patient or public health. It has also led to drug prices that patients and health care systems cannot afford. Three alternate approaches to promoting pharmaceutical innovation have been proposed to address these shortcomings. Delinkage models involve payments for drug innovation based on public health value rather than on a per-use basis. Public manufacturing models call upon governments and nonprofit organizations to lead drug discovery, development, and production. Public-private partnership models entail publicly-funded organizations working closely with for-profit partners on drug development and price-setting. Each model exhibits promise in promoting prescription drug innovation and access. This paper reviews these transformative models in detail, examining their key characteristics, advantages, and limitations

Generic but Expensive: Why Prices Can Remain High for Off-Patent Drugs

Brand-name prescription drugs are sold at extremely high prices in the US because patents and other market exclusivities provided by the government allow manufacturers to exclude direct competition. This period of market exclusivity was intended for pharmaceutical manufacturers to recoup costs associated with research and development of those products and make profits. The other intended outcome of this system is that the market exclusivity period for brand-name drugs should be self-limited, with competition being able to flourish after the market exclusivities end. Such competition has been most effectively supplied by generic drug manufacturers that produce Food and Drug Administration (FDA)-approved bioequivalent versions of the brand-name product. The market entry of these generic drugs—with market uptake augmented by automatic substitution of brand-name prescriptions at the pharmacy— remains the only market intervention that lowers prescription drug prices consistently and substantially. Generic manufacturers can make their drugs available at considerably lower cost because of various market advantages they have over brand-name drugs. When this process does not operate as intended, drug prices do not fall after market exclusivity expiration, or prices for generic drugs may actually increase. In this paper, we examine the variety of factors that mitigate the cost savings associated with introduction of interchangeable generic drugs, especially older, off-patent drugs. We then consider policy solutions that may help stabilize the generic drug marketplace, diminishing the frequency and impact of generic price increases