The Key To Lowering Drug Prices Is Improving Patent Quality

from the patent-quality-week dept

This post is one of a series of posts we're running this week in support of Patent Quality Week, exploring how better patent quality is key to stopping efforts that hinder innovation.

Patents are increasingly a hot topic in drug price policy conversations. So much so, that one might wonder if this newfound attention is deserved. For example, a recent Senate Judiciary Subcommittee hearing examining anticompetitive conduct in prescription drug markets ended up focusing heavily on Pharma’s blatant abuse of U.S. patent laws. Indeed, it seemed at times that patent thicketing had eclipsed the many other anticompetitive “shenanigans” that Pharma uses to delay competition.

So why is there such a growing spotlight on patents?

First, it’s important to realize just how big the drug price problem is. Prescription drug spending remains a critical issue in the United States as millions of American patients and the U.S. healthcare system struggle to keep pace with the growing price tag for medical innovations with limited financial reprieve from low-cost alternatives. In 2020, the total US drug spending was estimated at $358.7 billion and the Centers for Medicare & Medicaid Services (CMS) projects national spending on healthcare to reach $6.2 trillion by 2028 – the bulk of the cost resting on shoulders of the federal government and American households (mainly through taxes and insurance premiums).

One of the key drivers of these rising costs are the habit of drug makers of blocking competition on older drugs that have proven themselves to be blockbusters. And the best modern strategy for doing that is creating a patent thicket. As Committee Chairman Senator Dick Durbin (D-IL) pointed out, “[T]he top-12 best-selling drugs in America each have an average of 71 patents and 78 percent of all new patents are for drugs that are already on the market.”

The reason behind this is two-fold. Older tactics have had successful antitrust cases filed against them, but patent thicketing is somewhat protected by the Noerr-Pennington Doctrine which states that (except for some limitations) people can petition their government even for anticompetitive reasons. That means it is up to the government to resist anticompetitive gaming of its regulations. The second reason is that the patent office is failing at just that. Dr. Rachel Moodie, vice president for Biosimilars Patents and Legal for Fresenius Kabi, a leading health care company, gave testimony stating, “[W]e see the U.S. Patent system as being an outlier now compared to other systems around the world… the way that the patent system is working right now is that it’s easy to circumvent certain rules that allow you to repetitively claim a similar invention over and over again.”

What is the result of this patent thicketing?

Drug manufacturer AbbVie has filed over 240 patent applications for a single drug, Humira, and received over 130 granted patents.  This patent thicket has allowed Humira to control the marketplace in the U.S., leading to Humira claiming the number 1 spot as the world’s bestseller since 2012 – while other countries have had access to more affordable biosimilars. AbbVie itself has had to cut prices by 80% in some markets due to competition.

AbbVie isn’t alone. A study by I-MAK found the practice of patent thicketing pervasive among the top 12 best selling drugs by revenue.

Just how big of a deal is patent thicketing?

The 2020 US revenues of just three drugs – Humira, Enbrel and Revlimid – represent 8.2% of total drug spending in that year. All three of these drugs should be facing competition now or be close to the end of their monopoly terms. They were approved in 2002, 1999, and 2005 respectively. Patent terms only extend 20 years and drugs have historically averaged a little over 14 years of protection on the market due to the length of the approval process (this includes patent term restoration passed by Congress to give some of this time back). Humira has a deal with biosimilar manufacturers that allows them to come to market in 2023, but Enbrel and Revlimid’s final patents don’t expire until 2029 and 2036. Add Imbruvica, a drug we could have seen competition this decade but won’t, and just those four drugs represent almost 10% of all US drug spending.

Competition, on the other hand, works when allowed to. A list by Fierce Pharma of the top 20 drugs by worldwide sales in 2020 indicates just how well competition works to lower the price of some of Big Pharma’s most sought after drugs. As competition from biosimilars and generics hits the marketplace, sales of the industry’s top performing drugs correspondingly drop. For example, as competition emerged against Johnson & Johnson’s ulcerative colitis drug, Stelara, the company had to cut its prices to remain competitive. The same report by Fierce Pharma also anticipates the number two drug, Keytruda, soon taking over the number one spot as Humira’s patent is expiring in 2023, opening it up to competition by biosimilars.

What does this have to do with patent quality?

Drug patent thickets are largely made up of low quality patents whose applications were only filed because of the benefit they provide in keeping competition away from top selling drugs. This means that any patent quality efforts are also efforts to reduce drug prices. For example, the USPTO’s inter partes review process (IPR) has been instrumental in cancelling low-quality patents and allowing new drug competition. This is one of the best tools created by the America Invents Act to cut through these dense patent thickets. IPRs were substantially weakened under the last administration, but a Congress that cares about drug pricing could restore and strengthen this tool to great effect.

Matthew Lane is the executive director of the Coalition Against Patent Abuse

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Filed Under: drug prices, patent quality, patent quality week, patents


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  1. icon
    Samuel Abram (profile), 21 Jul 2021 @ 12:24pm

    Revlimid patent expiration

    Why would a generic be expected for Revlimid in 2036 when the patent will expire in 2026? Does it really take that long to make a generic drug?

    reply to this | link to this | view in thread ]

  2. identicon
    Matthew Lane, 21 Jul 2021 @ 2:09pm

    Re: Revlimid patent expiration

    There are three companies that settled. So they can enter on a "limited basis" starting next year and then without restriction starting in 2026. But that's still under a license. I missed these settlements, but it's still not perfect competition until the patents all expire.

    https://www.fiercepharma.com/pharma/after-patent-win-at-pto-bms-inks-revlimid-settlement-dr- reddy-s

    reply to this | link to this | view in thread ]

  3. identicon
    Dan Z, 21 Jul 2021 @ 2:29pm

    So why is insulin so expensive in the USA?
    It was created in 1922 , just under 100 years ago
    How can it still have a patent?
    Looks like Collusion to me!

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, 21 Jul 2021 @ 3:40pm

    Surely the priority idnt the wuality of a patent but the length of time that's given to the drug company before look a like drugs can be developed and marketed, isn't it? It's obvious that every company wants to continue to milk the patent for as long as possible, for as much money as possible but in so many cases, public money is used to develope the drug but next to nothing is given back, allowing the drug company to make a fortune. Shortening the time before a drug can be copied would make a hell of a difference!

    reply to this | link to this | view in thread ]

  5. identicon
    Anonymous Coward, 21 Jul 2021 @ 3:50pm

    The answers are only an easy search away...

    The short answer is: Collusion is part of it, but not nearly all of it. For instance, patents, as described in the post above.

    There are additional factors. A more thorough discussion can be found here: May Clinic Proceedings: High Cost of Insulin

    reply to this | link to this | view in thread ]

  6. icon
    fairuse (profile), 21 Jul 2021 @ 10:20pm

    Enbrel

    I started using Enbrel a few years before 1999. Insurance picked up cost (several thousand per month).

    In 2020 Insurance still picks up the "cost' and "enbrel" pays copay. Price is still very high.

    Sidebar: These drugs are advertised on USA TV nonstop. Make these TV ads illegal and the $$$ that The Weather Channel and other ad supported channels struggle.

    There are always deals floating around.

    reply to this | link to this | view in thread ]

  7. identicon
    Dave, 21 Jul 2021 @ 10:35pm

    Unfortunately, Big Pharma does not want drug prices lowered in the US, and they will go to any means necessary to get their way.

    reply to this | link to this | view in thread ]

  8. identicon
    Yali Friedman, 22 Jul 2021 @ 12:14pm

    more than just higher quality patents

    It's more than just higher quality patents. There's a lot of regulatory elements that can make a difference. Biologic drugs like Humira, for example, are able to have patent thickets because a) you can't make a generic for a biologic drug (just a biosimilar) and b) there's no patent linkage. Patent linkage is crucial for swift generic entry of small-molecule drugs because it makes clear which patents must expire/be invalidated. For biologics the situation is less certain = more expensive.

    As for follow-on patents for small molecules, in all the cases of "evergreening" I looked at, generics were able to launch when predicted -- not all patents block generic entry.

    Happy to continue the conversation...

    reply to this | link to this | view in thread ]

  9. identicon
    Yali Friedman, 22 Jul 2021 @ 12:31pm

    Re: Revlimid patent expiration

    It's a common misconception that the mere presence of a patent blocks generics.

    Aspirin still has patents on it (it was developed in the 1800s), yet there's tons of generic aspirins on the market.

    reply to this | link to this | view in thread ]

  10. identicon
    Yali Friedman, 22 Jul 2021 @ 12:34pm

    Re:

    It's more complicated than that. The modern insulins must still meet the requirements for patentability -- novelty, usefulness and nonobviousness.

    If you want to understand why cheaper off-patent Insulins aren't on the market take a look at product hopping: https://coag.gov/app/uploads/2020/11/Insulin-Report-102020.pdf

    reply to this | link to this | view in thread ]


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