Are Patents Leading To Drugs That Cure The Wrong Patients?

Source: Forbes

That’s not a headline you’ve read before, I’ll bet. New evidence suggests that drug companies invest too much in therapies targeting diseases at late stages, and not enough in prevention or early-state therapies.

It is emotionally satisfying and socially acceptable to say that buying an extra few months of life is priceless, but if resources invested in such drugs could have been invested in drugs that would have dramatically increased the quality or length of lives of other patients, it is not evil to suggest that the resources were misallocated.

Eric Budish of the University of Chicago, and colleagues, have observed that drug companies invest significantly more in researching and developing therapies for late-stage than early-stage cancers. They have identified the patent system as the culprit. As summarized in The Economist’s Free Exchange blog:

The economists find that pharmaceutical companies conduct 30 times more clinical trials for recurrent cancer drugs than for preventive drugs (the effect persists even after adjusting for market size). The authors also show that firms divert their R&D expenditures away from more curable, localized cancers and focus on incurable metastatic and recurrent cancers instead. The patent system encourages pharmaceuticals to pump out drugs aimed at those who have almost no chance of surviving the cancer anyway. This patent distortion costs the U.S. economy around $89 billion a year in lost lives.

To put it (a little too) simply, patents have a term of twenty years. If a drug-maker has to do a clinical trial that lasts ten years until it reaches its endpoints, it will have only ten years of patent life. If a trial for a late-stage cancer only takes one year to reach its endpoints, it will have up to nineteen years of patent life. Here is an example from the study:

A first study, de Bono et al. (2011), analyzed a treatment for metastatic prostate cancer (an advanced stage of prostate cancer with a five-year survival rate on the order of 20 percent). The study tracked patient survival for a median time of 12.8 months, and estimated statistically significant improvements in survival (a gain of 3.9 months of life on average). A second study, Jones et al. (2011), analyzed a treatment for localized prostate cancer (an early stage of prostate cancer with a five-year survival rate on the order of 80 percent). The study tracked patient survival for a median time of 9.1 years, estimating statistically significant improvements in survival. As expected, this stark difference in patient follow-up times translates into a large difference in clinical trial length: 3 years for the metastatic patient trial versus 18 years for the localized patient trial. All else equal, the drug treating localized patients would receive 15 fewer years of effective patent life relative to the drug treating metastatic patients.

The Economist’s Free Exchange blogger agrees that the patent system is to blame. However, that may be the wrong conclusion. The Food and Drug Administration (FDA), not the patent office, imposes the burden of clinical trials on drug-makers, and these costs have spiraled upwards.

The research-based pharmaceutical industry has endorsed patent-term restoration, which means adding the time chewed up in FDA-mandated R&D to the back end of the patent. This was partially achieved in the U.S. via the Hatch-Waxman Act (1984). Patent-term restoration mitigates the problem for the industry, but it is a weak solution for society. It reduces the incentive for the industry to advocate reforms that reduce the FDA’s power. Instead, firms are largely satisfied with paying user-fees in an attempt to speed up the FDA’s unreformed regulatory processes.

As Budish and colleagues note, the use of surrogate endpoints can help solve the problem. However, the availability of surrogate endpoints is disease-specific. (The widespread use of statins to reduce cardiovascular risks would not have occurred unless blood-cholesterol was accepted as a surrogate endpoint.)

A better solution would be dramatic change in the FDA’s demands for clinical trials. In his recent book, The Cure In The Code, Peter Huber explains how adaptive clinical trials can speed up R&D. Sophisticated statistical techniques could allow clinical trials to “learn” as they proceed, and permit earlier and wider use of new medicines without jeopardizing the FDA’s so-called “gold standard.”

To improve the benefits of pharmaceutical R&D, let’s focus on fixing the FDA first, before fiddling with a patent system that has successfully promoted medical innovation.