Patent extensions being evoked under the European Union (EU) Paediatric Regulation are conservatively estimated to have cost the NHS around £300 million over the last three years, "while providing little significant benefit to younger patients," says a new industry report.

The patent extensions are disproportionately rewarding originator companies, providing them with huge financial returns which are "completely out of kilter with the cost and benefit of the work put in," according to the report, which is published by the British Generic Manufacturers Association (BGMA).

Unless modifications are made to the EU regulation, an estimated £500 million more could be spent unnecessarily by the NHS over the next five years, before an economic impact report is due to be published in 2017, the group warns.

Under current EU paediatric legislation, originator companies can apply for an extension to the Supplementary Protection Certificate (SPC) which has already extended the patent period. In order to gain an additional six months' market exclusivity, companies have to research their medicine for use in children and provide information on the results.

The "reward" to the company for carrying out this work is a further six months' overall patent protection from generic competition for the product as a whole, not just the paediatric versions. This means, says the BGMA, that companies can achieve returns "of hundreds of millions of pounds for an investment of as little as one or two million to carry out the paediatric research."

"It is morally right that paediatric uses of medicines should be researched and licensed. We do not object to there being a financial incentive, if one is needed, to encourage companies to do this work," said the industry group’s director general, Warwick Smith.

However, he added: "it just seems that such a high return on such comparatively low investment is beyond all reasonable scale and proportionality. If unchecked, this could cost the NHS a further £500 million over the next five years."

There are "many examples of a pharmaceutical company being granted an extension of patent in exchange for a paediatric trial of a drug, and it raises important questions about the regulation and its current parameters," said Mr Smith, who added: "this blunt approach to regulation is costing the NHS hundreds of millions of pounds and we believe a more tailored approach is necessary."

The report estimates that the extension of patent protection through an SPC on Pfizer's Lipitor (atorvastatin) cost an additional £161.2 million, "all paid for by the NHS and the UK taxpayer."

For other top-selling products, the report estimates that the additional costs to the NHS have been: - Merck & Co's Cozaar (losartan), £32.2 million; - AstraZeneca's Arimidex (anastrazole), £25.1 million; - Novartis' Diovan (valsartan) capsules, £18.4 million, and tablets, £322,500; - Pfizer's Xalatan (latanoprost), £20.8 million; and - Merck & Co's Singulair (montelukast), £26.6 million.

As an alternative to extending the SPC, the BGMA suggests that different branding and reimbursement regimes may be required to ensure that there is "a proportionate and effective incentive." 

"This could include an enhanced system of tax credits or bespoke reimbursement regimes, or direct grants. Medicines that may only be used in very low volumes, and are likely to be uneconomic to develop under 'normal' pricing arrangements, could be reimbursed at higher levels to take into account their societal value," Mr Smith added.