Aarp's 5-point plan to lower prescription drug prices

THE PROBLEM: ENDLESS PATENTS To encourage innovation and allow pharmaceutical companies to recoup their expenses, the federal government grants 20-year patents on new drugs that give

companies the exclusive right to market the medication. Because it takes years to get the drug to market, manufacturers end up with a monopoly lasting about 14 years, on average. At that

point, theoretically, generic drugmakers can begin selling competing versions. Substituting generics for brand-name drugs can cut costs dramatically. In 2012, the U.S. Government

Accountability Office estimated that generics had saved the U.S. health care system $1 trillion during the previous decade. But drug companies do all they can to retain their monopolies. For

example, they can “evergreen” their patents, usually by repurposing or reformulating medications. These strategies, such as changing dosage schedules, don't necessarily make the drug

any better. They can, however, add as many as 20 years or more to their monopoly periods. These tweaks effectively prevent less expensive generics from entering the market. "Even a

minor tweak may be enough to get you past the Patent and Trademark Office,” says Robin Feldman, author of _Drugs, Money & Secret Handshakes_ and a professor at UC Hastings College of the

Law in San Francisco. “Conceivably, you can string these out over and over again, and no one asks whether we're getting any value for our money." In a 2018 analysis, Feldman and

her colleagues found that of the roughly 100 best-selling drugs, more than 70 percent extended their protection at least once. For example, Lyrica, used to treat nerve pain, had its monopoly

extended from 2009 to 2018 with 16 additions. The cholesterol drug Crestor's monopoly was lengthened from 2008 to 2022 by piling on 32 additions. “These are not outliers,” says

Feldman. “This is business as usual." THE SOLUTION: There is some talk in Congress about attacking the practice of evergreening, Purvis says. “But doing a complete patent reform would

be very complicated and a very heavy weapon,” she says. “In the meantime, there are smaller efforts that are nibbling around the edges to get at the abuses." Getty Images THE PROBLEM:

THE MYSTERIOUS MIDDLE A number of different parties stand between Americans at the pharmacy counter and the companies that make their drugs. The drugs themselves go from manufacturer to

wholesaler to pharmacy. The money takes a more complicated route. At one end, people and their health plans pay into the system; at the other end, the manufacturer gets paid. In between,

there's a confusing flow of money among various parties, including pharmacies, wholesalers and other entities called pharmacy benefit managers (PBMs), which administer drug benefits on

behalf of insurers and negotiate with drug manufacturers, wholesalers and pharmacies. The interactions between these parties and the deals they make present various opportunities to tamp

down the ultimate price of drugs — or drive it up even more. Because there's little transparency in this market — transactions among parties in the drug supply chain are rarely made

public — it can be difficult to tell whether any of them are contributing to higher drug prices or being incentivized not to keep them under control. THE SOLUTION: Given the complexity of

the pharmaceutical distribution system, there are no simple answers, but improvements are possible. For one, says Purvis, health insurers need to be aware of the rebates and fees being

negotiated on their behalf within the distribution chain; knowing that could help them root out possible inefficiencies. Other proposed fixes, however, might be counterproductive, Purvis

says, such as proposals to publicly reveal detailed information about all of the transactions taking place within the supply chain. “Many experts have noted that would allow competitors to

figure out what their rivals are charging, which could dampen incentives to offer lower prices. Such disclosures could also allow drugmakers to coordinate prices increases.” THE PROBLEM: THE

RESEARCH GIVEAWAY Big Pharma justifies high drug prices by saying they are needed to cover the costs of innovative research and development. That number is pegged at $2.6 billion per drug,

according to a 2014 analysis by the Tufts Center for the Study of Drug Development, which gets 25 percent of its funds from pharmaceutical company donations. But experts say that estimate of

development costs is somewhat deceptive because it encompasses far more than the actual expenditures for guiding a drug through the lengthy approval process; for example, it also includes

capital costs (what the money would yield if it was invested rather than tied up developing a new drug). The reality is that virtually all of today's new drugs, such as blockbuster

immunotherapies for cancer, have roots in government-funded research at the National Institutes of Health or leading academic centers across the country. Every one of the 210 new drugs

approved by the FDA between 2010 and 2016 began life in NIH-funded labs, representing grant funding totaling more than $100 billion, a 2018 report by researchers at Bentley University

reveals. Drug companies rarely, if ever, do these fishing expeditions of basic research, the stuff that might one day lead to a breakthrough drug but doesn't have an immediate payoff.

That work is increasingly funded by taxpayers. Sovaldi, a medicine made by Gilead Sciences, is a prime example of how this process plays out. The drug, a highly successful treatment against

the hepatitis C virus, was developed by a biotech company cofounded by a Department of Veterans Affairs scientist. Gilead then bought the company, including the monopoly rights, for $11

billion, then spent an additional $300 million to steer Sovaldi through clinical trials. In 2013, the drug was priced at $1,000 per pill, or $84,000 for the 12-week course of treatment, even

though it cost no more than $136 to produce one treatment, according to a 2014 analysis by University of Liverpool researchers. The patent doesn't expire until 2029, ensuring the

company of generous profits for many years. It's all perfectly legal, since taxpayer-funded scientists are permitted to patent their discoveries in order to speed discoveries from the

laboratory bench to a patient's bedside.