Kara Sears
The creation of drug patent laws in the United States has had a significant impact on the pharmaceutical industry, with companies investing heavily in research and development to innovate and create new treatments. These laws provide patent protection for brand pharmaceutical companies, incentivizing them to develop cures and treatments that improve the quality of life for patients. However, the US patent system has faced criticism for keeping drug prices high as companies extend their drug patents through a process called evergreening, delaying the entry of generic competitors into the market. This has led to discussions on rethinking patenting rules to balance innovation and patient access while ensuring ethical practices in the industry.
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What You'll Learn
- Brand pharmaceutical companies are rewarded for innovation
- Expiry allows generic manufacturers to make the same medicine
- International agreements have harmonized patent protection aspects
- The US Patent and Trademark Office grants drugmakers patents
- Evergreening is an unethical tactic to extend monopolies
Brand pharmaceutical companies are rewarded for innovation
The US pharmaceutical industry is predicated on a balance between innovation and access. Brand pharmaceutical companies are rewarded for innovation by being granted patents and exclusivity periods. Patents allow companies to recoup substantial research and development investments. In the US, companies are incentivised to innovate through the granting of 20-year patents for each new drug. In addition, companies are granted 12 years of guaranteed market exclusivity for biologics, with extra monopoly time to incentivise paediatric drug development and orphan drugs.
The US patent system has been criticised for not adequately rewarding complex research into treatments for prevalent diseases and conditions. For instance, Alzheimer's disease, immunological conditions, and neurological diseases are scientifically challenging areas of research that can take many years. However, these forms of research and development are among the least rewarded by the current patent system.
In response to this issue, legislators have taken steps to address the problem of dwindling patent life. In 1984, the Hatch-Waxman Amendments were passed, introducing a new section 156 of the Patent Act. This allows the USPTO to restore some of the lost time to one patent selected by the drug applicant. However, under this section, the patent owner can only recover half of the time spent in clinical trials, with a maximum recovery of five years.
Despite these efforts, there is still concern over anticompetitive behaviour associated with prolonged patent protection. Pharmaceutical manufacturers have been accused of creating "patent thickets" around profitable drugs, where a large number of patents cover a single product. This deters competitors from challenging the patents and allows the patent holder to maintain exclusivity. As a result, patients pay higher drug prices for longer.
To address this issue, Congress has been encouraged to strengthen patent laws to increase patient access while continuing to reward true innovation. This includes tackling the practice of "evergreening", where pharmaceutical companies game the patent system to extend monopolies on lifesaving drugs. By removing incentives for excessive patenting and lifting legal barriers for generic drug companies, competition can be encouraged, leading to reduced drug prices for patients.
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Expiry allows generic manufacturers to make the same medicine
The US pharmaceutical industry is based on a balance between innovation and access. Brand pharmaceutical companies are rewarded for inventing and developing new treatments and cures that improve the quality of life for everyone. In return, current law provides these companies with 12 years of guaranteed market exclusivity for biologics and 20 years for each patent. There is also extra monopoly time to incentivize pediatric drug development and orphan drugs. During this period, brand drugs are priced and sold without competition. However, upon the expiry of this exclusivity period, generic manufacturers are provided with the opportunity to make the same medicine.
Generic manufacturers can produce the same medicine at a lower cost, which significantly reduces the price of medicine for patients. This increased competition benefits patients by providing access to more affordable, FDA-approved drugs. For example, prescription drug costs have been shown to decline by more than 60% after 12 months of generics entering the market. This competition fosters innovation and ensures that patients have access to a range of treatment options.
However, it is important to note that the patent system has been criticized for being abused to delay patient access and extend exclusivity periods. Pharmaceutical companies may use strategies such as patent thicketing, where a single drug is protected by multiple patents, to prolong their monopoly. This can result in higher drug prices for patients and limit the availability of alternative treatments.
To address this issue, there have been calls for strengthening patent laws to increase patient access while continuing to reward innovation. Secretary Alex Azar emphasized that "Congress rewarded brand pharmaceutical companies with a set period for monopoly patent protection and, upon expiration of that time period, competition should begin." This statement highlights the intended balance between innovation and access, ensuring that patients can benefit from affordable medicines once the exclusivity period ends.
The ability to manufacture generic drugs is particularly important in emerging markets with developing healthcare systems and growing middle-class populations. It allows these regions to prioritize patent protection in a cost-effective manner, as obtaining and maintaining global patent protection can be resource-intensive. By selectively patenting key commercial territories, companies can balance the costs of worldwide patent coverage with the potential revenue from smaller markets. This international variation in patent protection creates opportunities for differential pricing and market entry strategies, ultimately improving access to medicines globally.
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International agreements have harmonized patent protection aspects
The US pharmaceutical industry is predicated on a balance between innovation and access. Brand pharmaceutical companies are rewarded for inventing and developing new treatments and cures that improve the quality of life for everyone. Current US law provides brand pharmaceutical companies with 12 years of guaranteed market exclusivity for biologics and 20 years for each patent. There is also extra monopoly time to incentivize paediatric drug development and orphan drugs.
Pharmaceutical patent protection forms the backbone of drug innovation, providing exclusivity periods that allow companies to recoup substantial research and development investments. However, the expansive use of the patent system to build barriers to generic and biosimilar competition results in patients paying higher drug prices for longer.
Other international agreements, such as the TPP, CPTPP, and USMCA, include regulatory requirements for the assessment of safety and efficacy, marketing authorization, and pharmaceutical inspections. These agreements may also serve as barriers to protect market shares and eliminate competition. For example, CETA, an agreement between the EU and Canada, does not include a provision for patent linkage, effectively enabling Canadian manufacturers to slow down generic entry through patent litigation.
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The US Patent and Trademark Office grants drugmakers patents
However, there is growing evidence that the patent system is being used to delay patient access and keep drug prices high. Drugmakers are extending their patents through a process known as "evergreening," where they make small tweaks to their drugs to sustain their monopolies for several years. This has resulted in patients paying higher drug prices for longer. According to a report by the Initiative for Medicines, Access & Knowledge (I-MAK), a nonprofit organization that advocates for drug patent reform, the top 12 brand drugs on the market last year were protected by an average of 71 patents each, providing an average of 38 years without generic competition.
The US Patent and Trademark Office has acknowledged the issue and is working to prevent drug companies from unjustifiably delaying generic competition. They aim to preserve the patent system while advancing competition that can lower drug prices. While patent protection is essential for incentivizing innovation, it should not be used to delay generic drugs and biosimilar competition beyond what is reasonably contemplated by law.
To address the issue of high drug prices, some have suggested reforming the US patent system. This includes removing patent thickets that threaten biosimilar development and increasing public understanding of the patent process. Additionally, the Association for Accessible Medicines (AAM) has submitted 42 recommendations in response to the HHS Blueprint to Lower Drug Prices to help restore the balance between innovation and access.
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Evergreening is an unethical tactic to extend monopolies
The US pharmaceutical industry is predicated on a balance between innovation and access. Brand pharmaceutical companies are rewarded for inventing and developing new treatments and cures that improve the quality of life for everyone. Patent protection forms the backbone of drug innovation, providing exclusivity periods that allow companies to recoup substantial research and development investments. However, evergreening is a contentious issue within this framework.
Evergreening refers to the strategy employed by pharmaceutical companies to extend the market exclusivity of their drugs beyond the expiration of the original patent. This is achieved by securing secondary patents on slight modifications such as new formulations, uses, dosages, or methods of delivery. While brand-name companies argue that this practice is necessary to protect their markets and fund further research and development, critics argue that it does little to improve people's health and primarily serves to maintain high prices and market exclusivity.
One of the most significant consequences of evergreening is the delayed entry of affordable generic medicines, which affects both individuals and public health systems. By extending monopoly periods, evergreening sustains high prices even after the original patent expires. This is particularly detrimental in low- and middle-income countries, where affordability is a key determinant of access. It also restricts market competition by discouraging or blocking generic manufacturers from entering the market, undermining price competition.
Evergreening has been a hotly debated topic, with India taking a notably restrictive stance against it. In the landmark case of Novartis AG v. Union of India (2013), India's Supreme Court denied a patent for the beta-crystalline form of imatinib mesylate, ruling that it lacked enhanced therapeutic efficacy. This judgment was praised globally for prioritizing public health over extended monopoly rights. However, it also attracted criticism from multinational pharmaceutical firms for being unfriendly to innovation.
In conclusion, evergreening is an unethical tactic employed by pharmaceutical companies to extend their monopolies and protect their profits. While it may provide some benefits in terms of encouraging innovation and funding research and development, the practice ultimately harms patients and public health systems by delaying access to affordable generic medicines and sustaining high drug prices.
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