Patent thickets lead to HIGHER drug costs and hurts competition

For pharmacy benefit managers (PBMs), patent thickets are anti-competitive and obstruct the ability to negotiate for savings, which ultimately means patients are not paying the lowest cost possible for medications. We’ve said this before because it’s very important: the key to lower prescription drug costs is adequate competition in the marketplace.

For brand drugs, the ability of PBMs to lower drug costs hinges on the availability of sufficient alternatives, which creates negotiating leverage through competition. Once drug manufacturers set drug prices, PBMs negotiate with those manufacturers for rebates, which are a key tool in helping to reduce prescription drug costs for consumers. Rebates reduce the overall costs for prescription drugs, thereby generating in savings every year. If there is no competitor on the market for a drug, PBMs lack the leverage to negotiate rebates on brand drugs.

That’s why the drug manufacturer strategy known as patent thickets is so pernicious – it intentionally keeps direct competitor products off the market, sometimes for years or even decades. I’ll leave you with the result: patent extensions for just those same five drugs led to over in additional net sales.

Patent abuses hurt everyone, especially patients. Let’s hope the committee’s hearing leads to a broader conversation on drug manufacturers’ schemes that block competition, increase their profits, and lead to higher drug costs for everyone.