The WSJ has run a couple of great articles describing the unintended consequences of changing the rules in the drug market. In 1983 Congress passed the Orphan Drug Act to encourage companies to do R/D into rare illnesses that impact small groups of people (from what I can gather <200,000 people).
The carrot is: "For seven years, it gives a company, in effect, the same market
protection that a patent does, without requiring the company to go
through the lengthy process of getting a patent. (A patent for a
scientific discovery is good for 20 years from filing, but typically
there are about 10 years remaining on it by the time it results in an
approved drug.) Unlike a patent, which is granted for a new discovery,
orphan-drug status can be given to a drug that has been on the market
in the U.S. for other diseases or used in other countries for years." How Rare Drugs Became a Lifeline for Drug Companies.
Another article describing in detail a patients life: A Biotech Drug Extends Life, But at What Cost?
End result is that Drug companies can charge what ever they like (in one case average of $600k) to recoup their investment, profit and fund new research. The unintended consequence is that now since drug companies can get easier market protection for a drug and huge profits, they are spending more money and time looking for the blockbuster orphan drug that will make them larger profits. they are also attracting venture money. And of course they are finding loopholes to hold onto the monopoly.
Just goes to show, the government needs to be careful in deciding to change the rules in an established marketplace. Blowback can occur. Just like in the vaccine market in a previous post: http://powdermonkey.blogs.com/powdermonkey/2005/11/wsj_editorial_o.html
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