Patent-extending “evergreening” strategies, which allow drug companies to maintain a market share after their drug patents expire, are partially responsible for increasing healthcare costs, according to new research from Geneva.
Led by Nathalie Vernaz of Geneva University Hospitals, researchers studied prescribing practices for eight different drugs—including antihistamines, insomnia medications, and antiseizure medications—in Geneva from 2001 to 2008.
They examined drug formularies and found that “follow-on drugs”—those with slight changes made to them after expired patents allow generic competitors to enter the market—accounted for an extra €30.3 million (nearly $39.7 million) in spending over eight years.
“The study provides further evidence that cost-saving policies encouraging generic medicine prescriptions, which can have substantial savings for healthcare expenditures, may be offset by increased costs from follow-on drugs,” researchers concluded in their study, published today in the journal PLOS Medicine. “Healthcare providers and policy makers should be aware of the impact of evergreening strategies.”
Do Follow-on Drugs Create Unnecessary Spending?
The creation of follow-on drugs—also called “me too” drugs—has been a topic of debate since the 1970s. The Geneva researchers, along with many before them, raised questions about whether evergreening promotes wasteful spending in the healthcare system by creating loopholes for drug companies to maintain a financial stake after their patents expire.
One common evergreening practice is to make small adjustments to the chemical composition of drugs, by combining formulas or making timed-release versions, for example. These practices, researchers claim, create a “spillover effect” and unnecessarily increase healthcare costs.
The U.S. Centers for Disease Control and Prevention (CDC) that the percentage of families struggling to pay their medical bills is slowly decreasing from 21.7 percent in 2011 to 20.3 percent in 2012.
Still, more than 54 million Americans carry unmanageable debt related to healthcare costs, causing some to speculate about whether the decline in the percentage of struggling families is caused by people avoiding the doctor during economic hard times.
The Patient's Bottom Line
While researchers were able to conclude that the evergreening of name-brand drugs costs the healthcare system more, they failed to incorporate one major factor into their research: the outcomes for patients.
Many drugs are re-released onto the market to meet the demands of patients for more effective treatments, as in the case of some timed-release versions of drugs. These can help prevent the peaks and valleys that can sometimes occur with the use of first-line drug treatments.
However, a major hurdle for people with chronic conditions that require steady treatment is the ability to afford the therapy on an ongoing basis.
Geneva has a single public hospital system, which provides health insurance coverage with universal access for everyone. However, in 2006, drug co-payments increased from 10 percent to 20 percent, even though branded drugs didn’t decrease in price, leading to larger out-of-pocket payments for patients.