Donald Trump urged to target ‘lazy patent expansion’ in US drug bill push

Generics maker Sandoz says president should focus on tactic of ‘evergreening’ pricier products in his drive to lower costs

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The chief executive of one of the world’s largest generic drugmakers has called on Donald Trump to tackle “lazy patent expansion” to cut the US drug bill, as the US president pushes to lower medicine prices for Americans. Richard Saynor, chief executive of Switzerland’s Sandoz, said he backed the intention of the administration’s “most favoured nation” policy — where it is seeking to cut prescription drug prices to the lowest level paid by other rich countries — but said more focus was needed on the plight of generic medicines, which make up 90 per cent of those used in the US. Generic drugs, produced after a patent expires, are usually about 80 per cent cheaper than the branded versions. The US pays less for generic medicines than many European countries because of a concentration of buyers, leading to a situation where many drugmakers stop supplying the medicines, creating shortages. Saynor said branded drugmakers — also known as originators or innovators — had in the past decade doubled the number of patents they filed to protect their intellectual property, leading to lengthy and risky court battles for generics makers that delay the availability of their cheaper products. “At the moment, there is very little risk” for originators that are “evergreening” their products — the practice of making minor adjustments to a drug in order to secure new patents. “If you’re an innovator, you’re getting rewarded for making it harder and harder. And [patent] offices don’t get rewarded for revoking patents. They get paid for filing. So again, you have a system that is rewarding more and more patents.” Trump said last week he planned to cut drug prices “almost immediately by 30 per cent to 80 per cent”. The US paid about 3.2 times more for branded drugs than other developed countries in 2022, according to research by RAND Healthcare. Trump signed an executive order that would give price targets to drug manufacturers and cut out intermediaries, allowing patients to buy medicines directly. He also said the US trade representative and Department of Commerce should probe countries that only allowed market access after significant price discounts.

The administration has not yet planned any big changes to the generics market in the US. But the prospect of tariffs on pharmaceuticals, which are being investigated as part of a so-called Section 232 probe into whether imports threaten national security, would hit the generics industry hardest because they have thinner margins and are often reliant on manufacturing in India. Saynor said the administration should bring back a reward for generic drugmakers that gave them six months exclusivity after they launched the first generic version of a medicine, which helped compensate for the legal risk they are taking. He said branded drugmakers had created so-called authorised generics to capture this benefit themselves and used “patent thickets” to make it an “extremely expensive and complicated process to bring a product to the market”. Saynor also criticised the system of rebates that keeps gross prices high in the US, because many intermediaries, known as pharmacy benefit managers, profit from a system of discounts. He said the US was “addicted to rebates”, which had a “distorting effect” on pricing. Many essential medicines such as antibiotics and anaesthetics are generic. Saynor said it was important to have a conversation about “sustainability of supply”. “You know, we sell a pack of antibiotics for cheaper than a packet of M&Ms,” he added. “That’s offensive.”