
Big Pharma Abusing Patent Laws To Seize And Destroy Legal Indian Generic Drugs - aj
http://techdirt.com/articles/20090807/0312375803.shtml
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streety
"India has a legal and thriving generic drug market that was built up
initially via a ban on pharma patents in India (which, as an aside, shows
again that a ban on patents can actually help create a thriving industry)."

Personally I would be looking for evidence of a thriving industry in novel
therapeutics, rather than generics, before considering everything hunky dory
after a ban.

~~~
jacquesm
Generics are a way of showing that the price of something is not related to
its actual cost.

Big Pharma uses their 'research costs money' argument to counter this, but
they forget - conveniently - to mention that they spend a very large multiple
of their expenses on research for the marketing department.

They abuse the patent system left, right and center in order to extend the
income from so called 'blockbuster' drugs at the expense of doing something
innovative for a smaller group of people.

Generics wouldn't stand a chance if it weren't for the price gouging going on.

~~~
yummyfajitas
A very large multiple? Not more than 3, and often much less.

[http://www.google.com/finance?q=NYSE:MRK&fstype=ii](http://www.google.com/finance?q=NYSE:MRK&fstype=ii)

[http://www.google.com/finance?q=NYSE:JNJ&fstype=ii](http://www.google.com/finance?q=NYSE:JNJ&fstype=ii)

If you actually look at the numbers, you'll see that Big Pharma's operating
expenses look much like Big Technology.

[http://www.google.com/finance?q=NASDAQ:INTC&fstype=ii](http://www.google.com/finance?q=NASDAQ:INTC&fstype=ii)

[http://www.google.com/finance?q=NASDAQ:GOOG&fstype=ii](http://www.google.com/finance?q=NASDAQ:GOOG&fstype=ii)

Note: my 1-3 multiple is actually just the ratio of "Selling/General/Admin.
Expenses, Total" / "Research & Development". It's a gratuitous overestimate,
since marketing is only a fraction of "Selling/General/Admin. Expenses". That
category also includes things like producing drugs, accounting, delivery, etc.
But I'm too lazy to look up a more detailed balance sheet.

[edit: I'm curious, why am I being downmodded? All I did was provide some
facts.]

~~~
jacquesm
Very large sums of money are spent per physician (up to 65 K / annum) to
promote 'new' drugs with little or no benefit over the 'old' drugs (other than
the extended patents).

Also there are large expenditures that are not directly in the marketing
budget but that you would normally classify as marketing, these include
seminars, promotional meetings with prescribers, lobbying activities and so
on.

enjoy the read:

<http://www.nybooks.com/articles/17244>

~~~
yummyfajitas
I wasn't looking at the marketing budget, but the "Selling/General/Admin.
Expenses, Total" line item on the income sheet. All the items you describe
(besides lobbying, which is an "Unusual expense") are included in my numbers,
as I noted at the end of my post.

Incidentally, I'm pretty sure your $65k/year is not typical. That would be the
equivalent of having one salaried employee spending 100% of his time selling
to a single doctor.

~~~
jacquesm
ok, but that assumes that all research is 'real' research, plenty of that goes
towards the extension of the life of existing drugs under new patents, which
is _the_ way to make money in that business.

You're right, it wasn't 65,000, it was 'only' 61,000... and no, of course it
is not spent by sending a full timer to a single physician, but the net
outcome of expenditure / target market is $61,000.

The figure came from this article:

[http://www.plosmedicine.org/article/info:doi/10.1371/journal...](http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050001)

~~~
yummyfajitas
That number is an upper bound, based on combining the largest estimates from
several different sources. It's not clear that the numbers from different
sources don't overlap, and the primary sources estimate only $29-35k/doctor in
marketing spending.

For comparison, Merck and Johnson and Johnson (the two drug companies I
bothered to look up) spent $13k/doctor on R&D.

Incidentally, one of the bigger items included in marketing is free samples
(totalling $16,800 per doctor), expensed at retail price [1]. That's basically
just a giveaway from the drug companies to people doctors feel are deserving
(usually low income/uninsured patients).

[1] The real cost is actually less, since the drug company would not
necessarily get retail price if the drugs were not given away free.

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kristiandupont
"Abusing" the patent laws? Isn't this _exactly_ what these laws were made for?

Not that I am defending Big Pharma, but the generic producers are profiting on
research that they did not fund. It has a number of good effects sure, but I
can understand why there are powers that find this unacceptable and want to
stop it.

------
gdee
Interesting link in one of the comments. OT but relevant to the business
practices of Big Pharma:
<http://www.groklaw.net/article.php?story=20090809231252693>

------
jcl
Despite the many problems with Big Pharma, the EU's action seems reasonable to
me... If you want to ship something that is illegal in the EU, there's no
reason to expect it to pass through EU ports unimpeded.

------
param
Too short an article to form any real conclusions. No direct quotes from big
pharma, no links to news about such confiscations. Waste of 2 mins.

~~~
jacquesm
What kind of quotes were you looking for ?

"Yes, we did that ?"

I hope the wsj is good enough for you:

<http://online.wsj.com/article/SB124949598103308449.html>

(google cache entry of the same link because of silly restrictions):
[http://74.125.77.132/search?q=cache:KQdnCYpa9HgJ:online.wsj....](http://74.125.77.132/search?q=cache:KQdnCYpa9HgJ:online.wsj.com/article/SB124949598103308449.html+india+eu+trade+complaint+generic+drugs&cd=2&hl=en&ct=clnk&client=firefox-a)

~~~
param
There was a note about someone alleging the drugs were counterfeit. There
could have been more details around that - who alleged it and why? Note that I
am not siding with big pharma here - far from it. I am siding with balanced
reporting.

