Evergreening viagra

Following on from yesterday's post about market power, another way that sellers can reduce competition and increase their market power is to sell a patented product. Patents grant a time-limited right to produce and sell a given product, and prevent competition for that particular product (although close substitutes can arise). Patents are particularly effective in pharmaceutical markets (as I've written about before, here and here). However, because they are time-limited (for example, twenty years in New Zealand), a firm's market power reduces substantially when the patent ends. Market power isn't entirely extinguished though, as even if generic versions of the product enter the market, the original supplier will continue to benefit from brand recognition (the generic products are not quite perfect substitutes for the original product).

Rather than allowing the patent to expire, what if it was possible to extend the patent for a further period of 20 years? In most cases, this isn't possible, but in the case of pharmaceutical products, it is. This is because, if a new use for the pharmaceutical product can be established, it can be patented for the new use. This is called evergreening. Which brings me to this story from the New Zealand Herald last month:

A major New Zealand Australia clinical trial has found some evidence that mothers taking Viagra during pregnancy could help babies suffering from stunted growth in the womb.

Viagra is used to treat male erectile dysfunction by dilating blood vessels in the pelvis. The researchers wondered whether it might work the same way in women by increasing blood supply to the placenta...

The study is part of a wider network of four trials across five countries.

Of course, if it turns out that Viagra (or sildenafil) is an effective treatment for babies suffering from stunted growth, then that is a great thing. And not just for the babies. Pfizer (the patent-holder for Viagra) would have protection from generic versions of sildenafil for another twenty years, meaning another twenty years of market power - not just for Viagra used for treating babies, but Viagra used for all treatments (including the highly profitable market for treating erectile dysfunction). A really cynical person would probably recognise that the sudden interest in new uses of Viagra now (the four trials mentioned in the article are not the only trials trying to find new uses for Viagra - see here for another example) is because Viagra comes off patent in April 2020. The clock is ticking for Pfizer, if they want to keep milking their Viagra cash cow.