Coyote Blog

from Kevin Drum

Today, Aaron Carroll tells us the story of TriCor, aka fenofibrate, a cholesterol drug licensed by Abbott Labs in 1998. Unfortunately, TriCor's patent was due to run out in 2000 and a maker of generic drugs was all set to produce a generic version. So Abbott sued, which delayed the generic version by 30 months:

In the interim, Abbott sought and obtained FDA approval for Tricor-2. That drug was nothing more than a branded reformulation of Tricor-1.Tricor-1 came in 67-mg, 134-mg, and 200-mg capsules; Tricor-2 came in 54-mg and 160-mg tablets. No new trials involving Tricor-2 were submitted to the FDA. But Tricor-2 came out while the generic company was still waiting to make Tricor-1, and thus Tricor-2 began selling with no direct competition.

Six months later, Tricor-2 evidently accounted for 97% of all fenofibrate prescriptions. By the time the generic copies of Tricor-1 came out, no one was taking it anymore, and they couldn’t penetrate the market.

Wash, rinse, repeat. The generic companies petitioned to make generic Tricor-2. Abbott filed a patent infringement suit buying them a 30 month delay. They got to work on Tricor-3. That tablet came in 48-mg and 145-mg doses. No new studies. They got approval. Evidently, 70 days after Tricor-3 was introduced, 70% of users were switched to the new branded drug. By the time the other companies got generic Tricor-2 out, Tricor-3 had 96% of the market.

Apparently, the entire moral blame for this accrues to Abbott, though he admits maybe physicians have some culpability for never prescribing the generic.

Really?  I have no particular desire to defend serial rent-seekers like Abbott, but the farce here seems to be in the regulatory system where small changes in what is essentially the packaging size allow companies to protect a government-enforced monopoly for their product.  Given the enormous difference in earnings between a monopoly product and one with a generic competitor, it is no surprise that Abbott is going to react to these incentives and use the system as presented to it.  In fact, if it did not, its executives would be making a huge ethical lapse in failing in their fiduciary responsibilities.

If you really think this is a corporate greed problem, then why is it that Apple doesn't keep competitors out of the smartphone market by making tiny tweaks to the screen size of the iPhone.  Wait, you say, screen size changes don't act as a barrier to competition?  Of course not.  But then why do changes in capsule size for a given chemical compound?  Because of the involvement of the government.

No, the problem here is not Abbott, the problem is a broken government regulatory system.  And you can pretty much count on Drum and his allies responding to anyone who actually tries to initiate a reform by streamlining this craziness by screaming that they just want to kill people by relaxing government regulations.