Raven said:
The only reason that the pharma will invest in research for a drug is if they can make a profit before the patent runs out.
Right in essence, but there's more to it...
As soon as a pharma company has a
promising drug in the pipeline, they file for the patent. Maybe with further research, that drug will turn out to be a bad idea ... but they've patented and done some research just in case.
In the US, drug patents last for 20 years. Since the drug company filed ASAP, it actually takes (on average) 12 of those 20 years to finish the research, do clinical trials and get government approval. The average new drug is out there for about 8 years before the patent runs out.
So research continues. The original company is looking for a "new and improved" version which they can get a new patent on. All other companies assign their generic-drug divisions to reverse engineer it, so they can sell a generic equivalent the minute the patent runs out.
And I literally mean "the minute" it runs out. I was working for Geneva Pharmaceuticals (the generic division of Novartis) when the patent on Prozac ran out. The demand for a cheap generic equivalent was huge. We had truckloads of the generic version packed up and ready to ship well in advance. We couldn't legally ship until the patent ran out - so at midnight on that day, everyone came to work in the middle of the night to ship that stuff the
second it was legal.
But here's the interesting bit - they don't worry about profit only "before the patent runs out". When the drug goes generic, the original company will start selling it as a generic. Because they've been making it for years, they already have the economies of scale set up; they can produce and sell the generic cheaper. They continue to make plenty of profit.
So you want the original for the price of a generic? Find out which generic company is owned by the big drug company, and buy their version.
It's the same thing. When I worked for Geneva, one of the biggest sellers for Novartis was Ritalin. Every other company made the generic equivalent: methylphenidate. But the Geneva "methylphenidate" was
real Ritalin, made by the same people in the same factory with the same formula.