Patented Drug Extension Strategies on Healthcare Spending: A Cost-Evaluation Analysis

Professor Guy Haller (SPHPM adjunct professor), together with a team of researchers have analysed the extent to which the 'evergreening' practices of pharmaceutical companies can increase the cost of supplying medication to hospital patients. Evergreening refers to the practice of developing a slight modification to an existing drug which is nearing the end of its patent to create a 'follow on' drug. The aim is to differentiate it from the generic medication which can be produced after the patent expiry, thereby increasing the profit to the pharmaceutical company.

In this study researchers analysed the effect of evergreening on healthcare spending, comparing the spending on brand/follow on drugs against the use of generic medications. They compared three different scenarios: the replacement of the branded drug with its generic equivalent; the replacement of the follow on drug; and replacing both the branded and the follow on drug.

The estimated savings for scenarios one, two and three were 15.9 million Euros, 14.4 million Euros and 30.3 million Euros respectively.

These findings serve to illustrate the extent to which evergreening practises can extend pharmaceutical company profit margins at the expense of medical funding. The full article can be found here.