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Explainer: evergreening and how big pharma keeps drug prices high

Explainer: evergreening and how big pharma keeps drug prices high

Companies which survive on their intellectual property, obviously should do what they legally can to maximise the return to their shareholders and generate funding to replace products that are coming out of patent protection. We wouldn't consider a company was well run otherwise. Naturally the general community would prefer lower cost access to these products and we rely on governments to set up a legal framework so that companies and the community equally prosper. Our CLL community has a particular interest in the success of pharmaceutical companies; we want them to develop new drugs with increased effectiveness with less side effects. Pharmaceutical companies can use a process termed 'Evergreening' to extend patent protection window. So what is Evergreening and how does it affect us? Hazel Moir, Adjunct Associate Professor; economics of patents, copyright and other "IP" at Australian National University and Deborah Gleeson, Lecturer in Public Health at La Trobe University explain:

The core concerns of the writers are that:

1) the current patent protection process in Australia is not robust enough to differentiate between innovative solutions that warrant patent protection and clever attempts to extend patent protection by the non innovative introduction of a variant of an existing drug

2) proving the drug variant is safe and effective can involve putting patients at risk in what should be deemed unnecessary clinical trials

3) Evergreening entails large-scale economic and social costs

4) free trade agreements may ensure that no future government can improve the patent system in Australia without violating the free trade agreement obligations. See "How trade agreements are locking in a broken patent system":

Interesting reading.


Photo: Upright Sundew; Drosera macrantha

2 Replies

Neil you wrote

‘ and we rely on governments to set up a legal framework so that companies and the community equally prosper.’

That is where the present system of drug development, manufacturing and sale is now starting to break down. That drug companies do need more oversight is a view now held by many.

One Swiss drug company went so far as to provide a 46 million SWF ‘bonus’ to a departing executive and the Swiss government, perhaps rightly, called this excessive, and put new laws into place to restrict these kinds of excesses.

No body questions that drug companies need to make some profits to pay for research and development, but there are serious questions as to how large that profit should be.

The drug companies always repeat their mantra that ‘all profits go towards the development of urgently required new drugs’.

But then these same company executives award themselves huge bonuses and spend massive amounts entertaining ( sorry that should read educating ) doctors at expensive holiday resorts in prime locations around the world.

Recently the high costs for both ‘evergreened’ drugs and new drugs is starting to come under close scrutiny.

Take this headline :-

‘Pharmaceutical industry gets high on fat profits’.

It continues:-

‘Imagine an industry that generates higher profit margins than any other and is no stranger to multi-billion dollar fines for malpractice.

Throw in widespread accusations of collusion and over-charging, and banking no doubt springs to mind.

In fact, the industry described above is responsible for the development of medicines to save lives and alleviate suffering, not the generation of profit for its own sake.

Pharmaceutical companies have developed the vast majority of medicines known to humankind, but they have profited handsomely from doing so, and not always by legitimate means.’

For a VERY enlightening article on this see this web page :-

With articles like the above now appearing regularly in the press, the politicians will soon be under some pressure to regulate ‘evergreening’ and other questionable practices in the pharmaceutical industry.

Again the press has realised this and the following article explains some of these issues:-

‘Pharmaceuticals industry facing fundamental change’

The article continues:-

‘Pharmaceuticals is an extraordinarily profitable business.

The most profitable, in fact, looking at figures for last year.

But for how much longer is the question occupying the minds not just of big pharma executives, but of health professionals and governments the world over.

There are already signs of trouble ahead - thousands of job losses and widespread consolidation are hardly characteristics of an industry in rude health.

But this is just the beginning of a process that could fundamentally change the pharmaceutical sector forever.’

More details at this link:-

I suspect that these issues will not be solved immediately, and probably not in my life time, but there are some major issues. We need governments to wake up and start taking this subject seriously.

For myself I am sitting in the middle.

Naturally as a member of this group I would like to see the costs for any CLL drug to be affordable by everyone. But I also have a family member working in the industry and thus get to know more than I sometimes would like.



Peak sales forecasts for Pharmacyclics' (NASDAQ: PCYC ) Imbruvica are estimated north of $3 billion:


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