Pharma industry abuses the patent system to create monopolies and raise prices.

The American patent system has, since our nation’s founding, served as a cornerstone of innovation. But the pharmaceutical industry’s willingness to undermine this system is having real consequences for American patients.

The skyrocketing cost of health care has been fueled by rapidly rising prescription drug prices, which are significantly higher for Americans than patients in other wealthy countries. While some argue that this is just the cost of being a global innovator, it is more complicated than that, and a key source of the problem is the abuse of the patent system.

Health care costs could be brought down through greater availability of generic drugs and biosimilars - drugs that are identical to branded drugs but distributed by another company after the original patent expires. Unfortunately, these lower-cost alternatives face an uphill battle to gain market access because pharmaceutical companies employ myriad tactics to prevent competition.

Large pharmaceutical companies have continually engaged in the strategic accumulation of patents to restrict patient access to more affordable drugs by delaying the entry of generic options into the market. While some of the additional patents represent true incremental innovation, many are deployed strategically to preserve a company’s monopoly rights on the original discovery. All in all, the tactics used are not new or useful, they are simply a way for Big Pharma to maintain their drug monopolies and continue charging American consumers more for drugs than they could if they had competition in the market.

Take Namenda, a drug produced by Forest Laboratories used to treat the confusion associated with Alzheimer’s Disease. Forest Laboratories faced generic competition on Namenda starting in 2015. Instead of competing with a generic drug on the market, the company responded by changing its formulation of Namenda from a twice-daily pill to a once-daily version. This new version was patented with protection on the product extending to 2029. The actions of Forest Laboratories were a clear example of the company’s attempt to game the patent system. In fact, they were successfully sued by the State of New York for attempting to block patients from having a choice between the twice-daily and once-daily pills and were forced to settle with New York and abandon their efforts.

By gaming the patent system to secure monopolies on their products, pharmaceutical companies are removing the motivation to innovate because they are simply creating new patents that are similar in scope to previously obtained ones, thus creating a captured market. This lack of competition has resulted in price increases averaging 68% since 2012 for the top selling drugs in the United States.