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Industrial protectionism and medicines: too many damaging effects

Pharmaceutical companies benefit from strong industrial protection which allows them to charge exorbitant prices for their medicines for a very long time.

In 2019, following a series of measures adopted under various regulations and directives, the European Union became the world's most protectionist market in the pharmaceutical field. The industrial protection of medicinal products is based on three main mechanisms: patents, supplementary protection certificates and "data protection". These mechanisms prevent any competition or price reductions for an extended time period. Firms are therefore in a powerful position to demand exorbitant prices, particularly in the absence of any other satisfactory treatment options, or when a drug is presented as particularly promising.

Furthermore, because they benefit from unwarranted earnings and readily granted protections, firms do not have sufficient incentives to invest in challenging and ambitious but potentially higher-risk research and development. Research priorities are set according to a market logic that results in the proliferation of drugs very similar to existing treatments, in order to gain market share.

Since the early 2000s, the incentives offered and the exorbitant prices that companies are permitted to charge in marketing so-called orphan drugs (drugs indicated in the treatment of a rare disease), have changed drug companies' business model. Research and development resources are channelled into a few profitable "niches", such as certain cancers, governed by a logic of financial speculation. It is regrettable that politicians do not seem to take this fact into account but instead give in to the insatiable appetites of the financial markets, to the detriment of public funds and the personal health expenditures of many patients around the world.

©Prescrire 1 November 2019

"Industrial protectionism and drugs: too many negative effects" Prescrire Int 2019; 28 (208): 275-277. (Pdf, subscribers only).

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