The aff makes it harder for generics to enter the market, which spike prices

Charlie Katebi,, 02-14-2024, "Patent Abuses Keep Prescription Drugs Unaffordable," No Publication, – Adi WH

DRUG PATENTS

Patients urgently need solutions to make medications affordable. The most proven method to lower the cost of medicine is to introduce more generics into the prescription drug market. Generic competition has saved America’s patients, employers, and taxpayers $2.6 trillion over the last decade (). In 2021 alone, generics reduced drug costs by $119 billion for Medicare beneficiaries and by $178 billion for commercially insured individuals.

Unfortunately, brand-name drugmakers have exploited loopholes in America’s patent system to block generic companies from offering consumers affordable options. America’s patent system has played an essential role in developing new medications and fostering robust generic competition. When a drug manufacturer invents a new drug, the company can apply for a product patent at the United States Patent and Trademark Office (USPTO that gives the inventor ownership of the invention for 20 years (). Federal law prohibits other companies and inventors from selling the same drug during this time. This gives drugmakers ample time to recoup the vast upfront research and development expenses they incurred for the drug by being the exclusive manufacturer and seller for the duration of the patent.

After 20 years, the patent expires and other companies are free to reproduce their drugs and charge consumers a lower price. Without the patenting process, inventors would have little incentive to spend enormous resources developing a drug that other companies could immediately mimic and mass produce at a low cost by free-riding off the original inventor’s research and development.

America’s patent system also allows drug manufacturers to add ancillary patents to a drug for specific features or updates. For example, manufacturers can obtain a method-of-treatment patent that covers the use of the drug to treat a certain disease. They can obtain a manufacturing patent that covers the way the drug is produced. Manufacturers can also obtain a patent on the delivery device that administers the drug.

However, drug manufacturers are increasingly obtaining patents that do not advance new drugs or new innovations for existing drugs. Instead, they are obtaining patents to stymie generic competition so they can raise prices for consumers.

ANCILLARY PATENTS ABUSE

For starters, drug manufacturers frequently abuse the practice of ancillary patenting. When a brand-name drugmaker invents a new drug, the drugmaker will often patent some but not all of the drug’s structure in its initial product patent. As the drug’s initial patent approaches its expiration date, the maker will then file new patents on its original structure to receive 20 more years of patent protection.

For example, when the drug company Genentech first developed the drug Perjeta in 2003, it filed a 20-year product patent for a part of the drug’s structure called the peptide sequence (). Then, in 2009, it filed an additional product patent for another feature of the drug called its acidic profile (). In another example, the drug company Merck extended the patent life on Keytruda by filing a new patent () on its initial design () and delayed competition by another six years. Brand-name drug manufacturers frequently abuse ancillary patenting to block generic competition. A 2023 analysis found that drugmakers filed ancillary patents on their drug’s original design 18 years after they first patented their drug (). This strategy successfully extended their medication’s patent life and delayed competition by 10 years. By delaying generic competitors, brand-name companies can charge significantly higher prices than they would be able to in a more functional marketplace.

PATENT THICKETS

Drug manufacturers also engage in a practice called building a “patent thicket” by utilizing duplicative patenting to block generic competitors (). This occurs when brand-name drugmakers file multiple patents that use slightly different words in each patent to describe the same feature. For example, a drugmaker can file a method-of-use patent that states “a method of treating rheumatoid arthritis in a human subject, administering a total body dose of 40 mg once every 13 days.” In addition, they could file a second patent that states “a method of reducing signs and symptoms in a patient with moderate to active rheumatoid arthritis, administering a total body dose of 40 mg once every 13 days” ().

In most cases, federal law forbids companies from obtaining multiple patents on a single feature of a product (). However, the USPTO allows companies to file multiple patents on the same feature of a product if their patents meet two conditions. First, these patents must expire on the same date. Second, the company lists these patents on a legal statement the USPTO offers, known as a terminal disclaimer ().

The USPTO established terminal disclaimers so that companies can immediately patent the first draft of their invention (). As companies refine the product, they can obtain a terminal disclaimer to file new patents on the updates to the same invention.

Unfortunately, brand-name drug manufacturers abuse terminal disclaimers by using them to obtain dozens of virtually identical patents to delay generic competitors (). Many patents within terminal disclaimers are of low quality and, therefore, vulnerable to litigation. However, it is extremely expensive for generic companies to litigate every patent inside a terminal disclaimer individually. On average, it costs generic drugmakers $774,000 to litigate a single patent on a brand-name drug (). When a brand-name drug manufacturer files so many patents, it becomes virtually impossible for generic makers to afford to contest them.

Brand-name drug manufacturers routinely obtain duplicative patents to delay competition. A 2023 analysis in the Journal of the American Medical Association found that brand-name drugmakers file the vast majority of terminally disclaimed patents as their drug’s 12-year exclusivity period expires (). These findings strongly suggest that brand-name drug manufacturers strategically obtain terminal disclaimers to block generic competitors from entering the market.