Expanding eligibility increases patent thickets that decrease innovation
Wayne Brough, 24 - policy director for R Street’s Technology and Innovation team. He manages product flow on technology policy issues while also continuing his own research in competition policy and intellectual property. Prior to R Street, Wayne was the president of the Innovation Defense Foundation. Wayne received his PhD in economics from George Mason University, with a focus in industrial organization and public choice. “Congress Wants to Revive Patents but May Strangle Innovation and Damage Health Care Access Instead” R Street Institute (a public policy think tank), 4/3, https://www.rstreet.org/commentary/congress-wants-to-revive-patents-but-may-strangle-innovation-and-damage-health-care-access-instead/ //DH
Expanding Patent Eligibility Limits Innovation and Competition
Supporters claim that patent eligibility practices in the wake of the aforementioned Supreme Court decisions hinder innovation and investment in critical technologies like AI, personalized medicine, and diagnostic testing. On the other hand, critics assert that the PERA would restore an earlier patent regime that granted patent protections too broadly, making it difficult for true innovators to navigate complex and far-reaching patents that limit entry into the market.
“Patent thickets” became prevalent in the late 1990s and early 2000s, particularly among pharmaceutical companies seeking to extend their exclusivity over blockbuster drugs in order to keep generic competitors at bay. This term refers to the practice of creating impenetrable walls of patents on different aspects of the same drug—from the primary patent covering the compound itself to secondary patents on characteristics like method of use, formulation, and other aspects of drug delivery—thereby creating a dense web, or “thicket,” of patents surrounding a single product. For example, I-MAK found that America’s top 10 best-selling drugs possess an average of 74 granted patents. These patent thickets extend the monopoly protection enjoyed by drug manufacturers well beyond the original patent while keeping low-cost generics out of the market.
Another tactic for extending monopoly protection of brand-name drugs is “evergreening,” or adding new patents to a drug as existing ones expire. By pursuing patents on different aspects of a drug, such as packaging, dosage, or other properties, it is possible to extend its dominance in the marketplace. While some changes may be warranted, others may simply protect exclusivity. This makes it important to evaluate a patent’s validity—something proposed changes within the PERA would make more difficult.
“Product hopping” is yet another way to game the patent system. Here, a company produces a reformulated version of a drug—by changing the dosage or introducing an extended-release version, for instance—and markets the new product heavily while urging prescribers to switch. They may even take the old product off the market. In one example, as the patent on its popular anti-ulcer drug Prilosec expired, AstraZeneca switched to Nexium, a drug with minimal modifications and an additional 13-year patent life. This product hop was estimated to cost the U.S. health care system over $2 billion annually.
Expanding patent eligibility to allow companies to obtain patents on abstract ideas, natural phenomena, or even basic computing functions would significantly extend the monopolies of patent owners, stifling innovation and competition by giving patent holders greater authority to challenge new entrants for infringement as they try to access the market. It would abuse the tools of government to slow down competition and stifle innovation.