At that event on drug pricing that I attended recently, someone asked a question about me-too drugs: he referred to drug companies looking to see what their competitors were making a killing off and bringing out their own version of it a couple of years later. Someone else referred to one company bringing our a pink version of the first company's yellow pill.
The really sad thing about the whole episode was not the nonsense that was being spouted, it was that the nonsense was being spouted by someone who held a position as an economist in the provincial ministry of health. If you've got that degree of lack of understanding within the ministry, it's no wonder you don't get get good policy being made.
The simple fact is that the only true me-too drugs are generics. If the original drug has gone off patent, any generic manufacturer can enter the market with a drug containing the same active ingredient as the original, so long as they can prove to the drug regulatory agency that their copy is bio-equivalent to the original drug. Bio-equivalent means, basically, that the the generic copy releases the active ingredient into the body at the same rate as does the original drug, so that there is no difference, so far as effect on the patient is concerned, between taking the original drug and taking the generic. (Actually there can be, since the generic might not hold the active ingredient together using the same carrying substance as does the original, and some patients who did just fine on the original drug might react badly to the stuff which is holding the generic drug together, but fortunately that doesn't seem to be too widespread a problem.)
Bio-equivalence isn't quite as easy to achieve as it might sound - not long ago the FDA pulled a couple of slow-release generics off the US market because the active ingredient wasn't, in fact, being released into the body at the same rate as in the original drug. Still, most generic copies achieve it.
That's what happens when the original drug goes off patent. If the so-called me-too drug comes onto the market while the original drug is still on patent - e.g. when Company B brings its pink pill out two years after Company A's yellow pill hit the market, while Company A's pill is still under patent - then the second pill must be sufficiently different from the first in terms of the way it works that it does not violate the first pill's patent. That means that it has to be different enough from the first drug to get its own patent, and to ensure that it doesn't work exactly the same way as the first drug does. And that means that it must have gone through exactly the same process of clinical trials as the first drug did. If it took the first drug, say, seven years to go through all three phases of clinical trials and to get clearance to go to market, it will have taken the second drug seven years to go through its own trials, unless it's an absolute miracle drug whose Phase III trial results were so strong that the process was stopped early, in which case there's no way it could be a simple copy of the first drug. If the pink pill comes out two years after the yellow one, it will be because it entered clinical trials two years after the first yellow one did, while the yellow one was still going through its own series of clinical trials. And again, it must be sufficiently different from the first drug that it does not violate the first drug's patent.
At least that's the case if you have product patents, as we, and most developed countries do. The story's different if you have what are sometimes known as process patents. Oversimplifying, product patents protect the final product itself while process patents protect the process by which that final product is made (I'm not going to get into the current state of TRIPS on this). So under a simple process-type patent, what you need to be able to do is find a different way of producing the same drug, and you're golden. Or pink.
As it happens, we know how that story plays out. Back in the 1960s, when India decided that it wanted to stimulate a domestic pharmaceutical industry, one of the things it did was remove product patents and just keep process patents. The strategy worked, up to a point. India developed a very economically significant pharmaceutical industry. The problem was that it was entirely a generics industry. Because you couldn't obtain patent protection on the fruits of your research, nobody did any significant research. Why spend money developing your yellow pill when someone else could come in with an identical pill, just assembled differently, a year or two later. So the Indian industry focussed on making generic copies, and not just generic copies but generic copies of drugs for rich country diseases, because that was where the money was. Big Pharma is often criticized for neglecting diseases endemic to poor countries, but here you had India, where diseases of poverty were not just on the doorstep but actually inside the door, and whose stock of human capital was quite remarkable (just think of all of the notable scientists who have Indian names) and its drug industry was ignoring the problem in its own back yard.
And it was ignoring it because in those pre-TRIPS days, India was a place where you could find me-too drugs in the sense the term was used by that guy from the provincial ministry of health. But when you've got a system of effective product patents, two on-patent drugs aimed at treating the same condition must have clearly different mechanisms of action. And in an age of personalized medicine, when different people who have the same disease will respond to different pills because of differences in the patients' genetic make-up, having multiple different on-patent drugs aimed at treating the same condition is probably a really good thing.