How Patent Abuse Fuels America’s Drug Pricing Problem
The United States patent system, originally designed to foster innovation and protect inventors, has become a battleground where pharmaceutical companies wage war against competition and affordability. While patents play an important role in incentivizing research and development, the current system has been manipulated to extend monopolies far beyond their intended duration, resulting in skyrocketing drug prices and delayed access to more affordable alternatives.
According to a study reported by Bloomberg News, between 2005 and 2015, 74% of new drug patents were issued for drugs already on the market. Instead of focusing on new treatments, pharmaceutical companies are dedicating resources to extending their financial control of existing products.
The consequences of this practice are far-reaching. Take, for example, the arthritis drug Enbrel. First approved by the FDA in 1998, Enbrel won’t face similar competition in the U.S. until 2029, despite the approval of two alternatives in 2016 and 2019. This 26-year monopoly stands in stark contrast to the situation in Europe, where Enbrel has faced biosimilar competition since 2017. The result is American patients continue to pay premium prices for an old drug, while their European counterparts are able to select more affordable options.
This is not an isolated case. A study of approximately 100 best-selling drugs found that nearly 80% received additional patents to extend their monopoly periods beyond their original intended lengths. These “patent thickets” create formidable barriers to market entry for generic competitors, keeping prices artificially high.
The impact on drug spending is significant. In the last decade, prescription drug spending in the United States increased by 60%, reaching over $400 billion. This unsustainable growth places a heavy burden on patients who struggle to afford their medications.
Several of the tactics employed by pharmaceutical companies have come under scrutiny. “Product hopping,” for instance, involves switching patents from a branded product with an expiring patent to a slightly modified version with a later-expiring patent. This strategy allows companies to maintain their monopoly without necessarily improving the drug’s efficacy.
Critics argue that these practices run counter to the original intent of the patent system. As former FDA Commissioner Scott Gottlieb, a Trump appointee, stated in 2018, it’s necessary to “end the shenanigans” that prevent generic medications from reaching the market. This political recognition of the problem is encouraging, but concrete action has been slow to materialize.
Bipartisan efforts have led to the introduction of several bills aimed at addressing various aspects of the patent system. However, progress has been sluggish. A legislative package of patent reforms has been stalled in the Senate for 18 months.
The manipulation of the patent system in the pharmaceutical industry extends beyond individual drugs to entire product categories, as evidenced by a recent study on insulin products. Researchers analyzed all publicly available FDA and patent data on insulin products from 1986 to 2019, examining 56 brand-name insulin products approved during this period. The study found that the median duration of expected patent protection on these insulin products was a lengthy 16 years, longer than many other comparable drugs. This extended protection was achieved through strategic patenting of delivery devices, with 63% of all patents on the 33 drug-device combinations relating to delivery devices rather than the insulin itself. Such practices not only prolong market exclusivity but also create significant barriers for potential competitors, ultimately contributing to the high cost of insulin that many patients struggle to afford.
To reach a productive end with patent law, it’s crucial to strike a balance between rewarding genuine innovation and ensuring timely access to affordable medications. Reform efforts should focus on closing loopholes that allow for patent abuse while maintaining incentives for true scientific breakthroughs. Potential solutions could include limiting the number of patents that can be filed on a single drug and implementing stricter criteria for patent extensions.
The stakes for this issue are high. As drug prices continue to rise, patients are forced to make difficult choices between their health and financial stability. By addressing the root causes of these price increases, including patent system abuse, we can work towards a future where the market system fuels innovative treatments that are affordable for all who need them.
