Intellectual Property Law and the Vulnerable Consumer

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“Nobody’s more frustrated than me.” “I am running a business.” These statements were made by Mylan Health CEO Heather Bresch regarding the recent firestorm over Mylan’s role in the dizzying upward spiral of prices for medication, some of which — including the medication at issue, Epi Pen — can make the difference between life and death for those who need the drug. Epi Pen is critical for those with asthma and some allergies where a sudden onset leads to suffocation and death.

In case you haven’t been keeping up, Mylan holds the patent for this injectable epinephrine product, although Mylan had no hand in its creation. There are similar drugs, but none are readily available to those in this country. Since 2007, Mylan has raised the price of this drug by more than 500%. Needless to say, that has risen faster than inflation.

The time-honored explanation for drug prices that are hundreds or even thousands of times the cost of manufacture is that these companies must recoup the cost of development, and they plough much of their profits back into the development of new drugs. For Mylan, the first consideration could be considered moot, but that cost was probably factored into the purchase price of the patent. On the second count, while it’s true that Mylan does some development, it mostly comes in the form of creating similar drugs to those already on the market. However, the only thing you’ve read so far that can really “justify” a 500% increase over less than a decade is the statement at the top by Bresch that she’s “running a business.”

However, Mylan isn’t slinging burgers or car stereos, where a consumer doesn’t need the product or can just go to the competition. So, the very important question here is how we treat intellectual property like a drug patent. Bresch and notorious Pharma Bro Martin Shkreli seem to think that we just treat it like any other patent. The two are treated differently under federal law, an explanation of which is too complicated and technical to be addressed here. Suffice it to say, however, that Congress has not comprehensively addressed pharmaceutical patents in more than thirty years.

The Affordable Care Act, i.e. Obamacare, changed healthcare law radically beginning in 2010, requiring by 2014 that everyone have health insurance or pay a penalty. The pricing incentives behind drugs and other forms of medical care have been distorted by the fact that most people get insurance through employers and insurance companies have their own deals with drug manufacturers and care providers. This has led to — or at least been an excuse for — insurance providers like Aetna to bail on the taxpayer-subsidized individual insurance exchanges created by Obamacare.

So is it time to revisit Obamacare and its intersection with drug prices? Is it time for caps on drug prices related to the cost of manufacture? Is it time for the federal government to expand its role in drug R&D? Is it time for — gulp! — single payer which will inevitably result in gigantic new outlays by the government and concomitant reductions in compensation to everyone else in healthcare, including putting most if not all insurers out of business?

These are questions that should be at the forefront of our national healthcare debate, but, if the state of the presidential race is any indication of that debate, there isn’t really a debate at all.

It is my personal opinion that the status quo is unsustainable, and that there has to be a big change when it comes to intellectual property that is necessary to sustain life. What kind of change that will be is beyond me, but I’d be interested to hear what your take is in the comments below.

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