Don’t undermine the system that incentivized GLP-1 development

OPINION:

A left-leaning pressure group recently sent a letter to Health and Human Services Secretary Robert F. Kennedy Jr. asking his agency to rescind the patent rights earned by the developers of GLP-1 drugs. Some 12% of U.S. adults have taken these medications.

Rescinding the patents is a dangerous idea that would reduce our health and well-being.

GLP-1 medications benefit patients with various conditions. They have become a popular weight loss drug that suppresses people’s appetites and helps patients living with Type 2 diabetes better control their blood sugar levels. They reduce the risks of heart attacks and strokes and have the potential to help patients living with addiction and neurodegenerative diseases.

Public Citizen argues that GLP-1 prices are “unjustifiable” and therefore cause excessive government expenditures. The group’s solution: The government should take away these companies’ private property by authorizing generic manufacturers to produce alternatives.

Patients would be harmed by such a move.

Prices for these medicines are already falling. The direct-to-consumer price for Zepbound is around $300 per month. For Wegovy, it’s $200. These prices are well below the estimated value-based price of these drugs or the estimated value they bring, which is as high as $1,400 a month.

The same is true for patients using insurance. The exact out-of-pocket costs vary depending on a person’s insurance, but paying $100 or less for a month’s supply is not atypical. Direct-to-consumer options cap patients’ exposure at prices well below the value that GLP-1s provide.

Although prices are not excessive and are getting lower by the day, implementing this takings policy would be costly.

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Patent rights are indispensable for improving “the quality and delivery of medical care.” That’s because developing innovative treatments is a long, expensive process that can take up to 15 years and cost $2.6 billion, excluding post-marketing expenditures. It is also risky: Nearly 94% of drugs entering human trials are ultimately not approved.

This is why the U.S. government grants patents. Granting innovators the exclusive right to manufacture and sell their inventions for a set period lets them recover their cost of capital. It provides a powerful incentive for drugmakers to continue investing in new cures.

Thanks to these incentives, the pharmaceutical industry has developed more than 900 novel medicines since 2000. These innovations have measurably improved patients’ lives. From 1990 to 2015, the introduction of these medicines was responsible for increasing Americans’ life expectancy by 35%.

Without the opportunity to recover the high cost of capital for developing new treatments, innovation would come to a halt, and that includes the discovery of potential new uses for GLP-1s.

Affordability matters too, which is why, when companies’ patent rights expire, competitive generic and biosimilar medicines can enter the market.

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Statins, essential medicines for lowering cholesterol, were once expensive but now cost pennies per dose. Hepatitis C is a costly chronic disease that can now be cured for most patients through medicines whose prices have fallen substantially because of competition. Competition doesn’t come just from generics and biosimilars; innovative GLP-1s are already competing with one another.

Patients are paying lower prices for GLP-1s thanks to competition. Allowing this process to continue will increase affordability even more while incentivizing companies to continue research into cures for Alzheimer’s disease, pancreatic cancer and other illnesses lacking effective treatments.

Improving the lives of patients today and tomorrow requires the government to maintain a careful balance between incentivizing innovation and promoting affordability. The current system of temporary exclusivity followed by robust competition, although not perfect, strikes the right balance. Violating this balance would undermine the incentive for innovations to the detriment of patients.

• Wayne Winegarden, Ph.D., is a senior fellow in business and economics and director of the Center for Medical Economics and Innovation at the Pacific Research Institute.

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