Longer exclusivity periods lead to increased drug prices and decrease pharma innovation

(Michael Nega, attended Chicago Kent College of Law – majored in Economics – minored in Philosophy at the University of Chicago, The Chicago-Kent Journal of Intellectual Property welcomes academic and professional author submissions on topics in all areas of intellectual property law including patents, copyrights, trade secrets, and trademarks, 02/19/2023, How Do Patents Impact Drug Prices?, Chicago Kent Journal of Intellectual Property, https://studentorgs.kentlaw.iit.edu/ckjip/how-do-patents-impact-drug-prices/, Accessed 6/29/2024) Blaine -- WH

Patent law gives inventors the right to exclude others from using and benefitting from their invention for a specified period. “During patent exclusivity, prices of products are typically set higher that permit patent holders to realize greater profits that would be achievable in a competitive marketplace.”[24] Pharmaceutical patents are typically “composition of matter” patents that cover specific molecules or combinations of molecules. [25] Many of the patents that pharmaceutical companies obtain cover either the tangible item (i.e., the composition of matter itself) or specific production processes to make the said composition. [26] “During the span of the patent, no other entity is allowed to sell a generic version of the drug, which keeps competition and lower prices at bay.” [27] When the patent system was first developed, its goal was to encourage innovation by giving certain protections to inventions. However, today’s pharmaceutical companies no longer operate primarily to innovate new medication but to monopolize existing ones. [28] It is estimated that about 80% of new patent applications are not for new medicines. [29] About 70% of the most popular drugs on the market have had an additional patent filed for them or have had their existing patent terms extended to further monopolize the market for that drug. [30] “An analysis of the ten best-selling drugs of 2019 found that, on average, these drugs held more than 69 patents with 37.5 years of patent protection, well past the 20 years of patent life intended by Congress. Furthermore, the prices for these drugs increased 71% over the previous five years.” [31]