What happens to the price of a drug before its patent expires? Things you need to know
Hello, this is John! I found an interesting article about the topic of "medicine prices," which is a little difficult to understand but also affects our wallets, so I'll explain it in an easy-to-understand way for complete beginners.
Do drugs become cheaper when their patents expire?
Did you know that medicines are protected by patents? When there is a patent, only a limited number of companies can make that medicine, and that company can sell the medicine exclusively for a certain period of time. However, when the patent expires, other companies can make the same medicine, so competition is born and the price of the medicine often goes down.
For example, imagine the medicine you get prescribed at the hospital when you have a cold. Even if it was sold at a very high price at first, once the patent expires and generic drugs (medicines with the same ingredients that are made by other companies after the patent expires) become available, the price drops dramatically.
The price of medicines is actually fixed?
But this raises the question: "Does the price of a drug stay the same until the patent expires?" In fact, that's not necessarily the case! According to this article, drug prices can change for various reasons even before the patent expires.
For example, pharmaceutical companies may secretly lower the price of their drugs. This does not mean lowering the listed price (the suggested retail price), but rather lowering the effective price by offering discounts or rebates to wholesalers and pharmacies.
What Lin et al.'s research reveals
According to Lin's research (analysis of data from 2007 to 2023), drug prices tend to fluctuate quite a bit even just before patents expire. In particular, when discounts and rebates are taken into account, drug prices may fluctuate more than we think.
So why does the price change?
There are several reasons why drug prices change.
- Intensifying competitionWhen a patent is about to expire, other pharmaceutical companies begin preparing generic drugs, so the company that makes the current drug may lower the price in an attempt to maintain market share.
- Market changes: As new treatments emerge and patient needs change, drug prices may adjust accordingly.
- National policy: Drug prices can be affected when governments regulate drug prices or encourage the use of generic drugs.
Impact on our lives
It is very important for us to know that the price of medicines fluctuates because the cost of medicines has a big impact on the household budget. For example, if there is a generic version, you can consult with your doctor and ask to switch to the generic version.
If you want to know more about drug prices, you can also ask a pharmacist or research your country's healthcare system.
A little personal impression
After reading this article, I realized once again that drug prices are really complicated. But if you get the information right and choose your medicine wisely, you should be able to keep your medical expenses down! I hope you'll use this information to become a smart consumer.
This article is based on the following original articles and is summarized from the author's perspective:
How do drug prices change before loss of
Exclusivity?