Once drugs lose patent protection, lower-price generics quickly siphon off as much as 90 percent of their sales.
This occurred with the brand-name drug Meloxicam in 2008. When it enjoyed patent exclusivity, the brand was selling a bottle of 100 pills for $400. Forty-eight hours after patent loss, a generic version could be purchased for $1.95 per bottle of 100 pills.
That is why companies fight so hard to keep their exclusivity. When one company offered Meloxicam, it could charge 205 times more than the 13 companies offering the generic version just two days after it lost its patent exclusivity.
Pharmaceutical companies argue that they charge so much when they have exclusivity because they are trying to cover their research and development costs (which are in the millions), accrued when creating a new drug.
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