---- Patent thickets -- Boosted IPR and higher volume of applications promotes ‘patent thickets’ to block competition – that drives up prices and stifles innovation

The term “patent thicket”10 includes two key aspects of patenting activity: the dozens or even hundreds of patent applications that drugmakers file with the U.S. Patent and Trademark Office (USPTO), and the patents that are actually granted. The high volume of both filed patent applications and granted patents creates a complex web of both actual barriers and potential or likely barriers that generic and biosimilar competitors must avoid to stay in compliance with the law. This creates a great deal of uncertainty that deters generic and biosimilar competitors from entering the market, as well as uncertainty for Americans as to when they will have lower-cost medications.11 Patent thickets have significant negative consequences for the country, including: ■ Harming public health ■ Straining household budgets ■ Overstressing the U.S. Patent and Trademark Office ■ Creating uncertainty in the market A BIPARTISAN GROUP OF U.S. SENATORS NOTED RECENTLY IN A LETTER TO USPTO DIRECTOR KATHI VIDAL, “THE PATENT ACT ENVISIONS A SINGLE PATENT PER INVENTION, NOT A LARGE PORTFOLIO BASED ON ONE CREATION.”12 Granted patents allow drugmakers to block competition. Today, drugmakers secure dozens or even hundreds 13 of patents on each of their top selling drugs, in order to expand and protect their monopoly power. The 744 granted patents 14 on America’s ten top selling drugs give pharmaceutical companies substantial power in litigation and negotiations to keep lower cost generic and biosimilar alternatives off the market for longer, and out of the hands of the American public. Patent applications also form part of patent thickets and deter competitors. Generic or biosimilar companies do not only evaluate granted patents when assessing whether to enter the market, they must also track and review patent applications to make their decision.15 Currently there are over 140 patent applications filed on average for each of the 10 top selling drugs in America.16 Notably, over 66% of patent applications were filed after the U.S. Food and Drug Administration (FDA) approved the drug to be on the market, indicating that drugmakers are attempting to prolong the existing exclusivity for as long as possible. Primary patents – or the patents that cover the main active ingredient or molecule17 – are set to expire this decade on 7 out of 10 of America’s best-selling drugs.18 When a product is a (or even the) key source of earnings and growth for a pharmaceutical company, there is significant financial incentive to mitigate the negative impact on the bottom line – or at least to delay the inevitable. Excessive patenting on existing products is one key strategy drugmakers use to extend their monopolies and their revenue streams.19 Generics and biosimilar companies in turn may want to enter the market for the top selling drugs, but this entails significant risk and resources because of the dense patent thickets protecting the monopolies on these products. As a result, while they are litigating the patents, generic and biosimilar companies are more likely to enter into settlements with the branded company rather than wait for a final ruling, regardless of the strength of their case.20 In many cases, the certainty of the settlement and earlier revenues outweigh the risks of prolonged litigation.21