Periodically there are reports in the news about the price of some drug being high, and the blame is usually placed on patents, particularly patents that cover not the active pharmaceutical ingredient (API) per se but later-filed (and thus later-expiring) patents that protect the use of the API or formulations containing it.
As is well-understood by patent practitioners, the exclusivity afforded by patent protection is what allows drug development companies to invest the resources necessary to shepherd the drugs through clinical trials to market. I've seen clients' promising drugs shelved in the development process not because of poor clinical results, but because the duration of patent protection available was short, thus making them bad risks for investors. Hence I've long advocated that we're better off erring on the side granting patent protection for a little more time than necessary than less time than necessary. I'd rather see new drugs developed than not, and in the long run patents expire and competition from generic drug manufacturers will drive the price of the drugs down. Better the drug development companies make some extra money during that time than the drugs never see the light of day.
One aspect of this dynamic that tends to receive less consideration is what happens after the patents on a drug expire. If the drug is highly profitable, it's common for several generic drug companies to entire the fray, precipitating a drop in price. But what happens when there's no competition?
There's a story in the New York Times this week illustrating the perils of that latter scenario. The API pyrimethamine has been on the market for over 60 years. Its patents expired long ago. But it's only made by one manufacturer. So after US marketing rights changed hands a number of times in the recent past, the current owner of the rights decided to raise the price. By over 50-fold, from $13.50 a pill to $750 per pill. In the USA that's legal, but such legality doesn't make the practice any less disgusting. (See נבל ברשות התורה if you don't follow that idea.)
Logic would seem to dictate that if someone else can make and sell these pills for less and still make a profit, they will, and that the competition will force a correction in the price. However, the fact that the market for this drug is small may augur against such competition, particularly if the entry barrier is high. Time will tell.
Interestingly, the NYT article doesn't mention something commonly mentioned in the discussion of drug prices, namely the possibility for competition through parallel importation of the drug from a country (like Canada) where there are price controls, and/or where the distribution remains in less greedy hands. Dr. Google indicates that this online pharmacy in Canada is offering the drug for US$1.67 per tablet. Why fork over a $150 co-pay to get a single pill through your US health insurer when for the same money you can get 90 tablets from Winnipeg?