Opinion | The Simplest Way to Lower Prescription Drug Prices in the US

As prescription drug prices in the US continue to rise, political leaders across administrations, including recently US President Donald Trump, have pledged to take on pharmaceutical companies by negotiating prices directly. Yet despite this rhetoric, drug prices in the US remain among the highest in the world. Americans pay roughly three times more for prescription drugs than consumers in other developed countries, and more than four times more for brand-name medications. One major reason these prices remain so high? Patent thickets.

Patent thickets are webs of overlapping patents that make it more difficult for competitors to enter the market by forcing them to manufacture biosimilars—near-identical versions of biologic drugs designed to match the original product’s safety and effectiveness—without infringing on existing patents or risking costly litigation. The result is higher legal barriers, delayed entry of biosimilars, and reduced competition, all of which contribute to persistently high brand-name drug prices.

For example, AbbVie, the company that developed the blockbuster drug Humira, filed over 100 secondary patents on the formulation, manufacturing, and dosing of Humira in the US. These secondary patents expire as late as 2034, although the active ingredient patent expired in 2016. As a result, biosimilars, which are 50 per cent cheaper than brand biologics, entered the EU market in 2018, five years before biosimilars entered the US market in 2023. This delay came from extensive patent litigation between biosimilar companies and AbbVie following the expiry of AbbVie’s Humira patent in 2016. This patent litigation was dismissed by the courts, who sided with AbbVie and found that large overlapping webs of patents do not violate US antitrust and intellectual property laws.

The EU uses a different and more efficient regulatory framework. The European Patent Office (EPO) has more stringent standards for patentability compared to the US Patent and Trademark Office (USPTO), which has lower standards for the ‘non-obviousness’ of a patent. Further, the patents the EPO approves are narrower in scope than those granted by the USPTO, which issues broad patents that allow companies to patent aspects of the drug beyond the active ingredient.

In AbbVie’s case, the USPTO granted the majority of the Humira patents to the inactive ingredients, formulations, and manufacturing of Humira. Since many of Humira’s secondary patents were filed later and expired after 2016, US biosimilar companies could not sell the drug without facing patent infringement litigation on the secondary patents, even after the patent for the active ingredient expired. Manufacturing biosimilars without infringing AbbVie’s secondary Humira patents was impossible because AbbVie had patented aspects of the drug that were necessary to make biosimilars. For example, the concentration of the active ingredient, the citrate buffer used to reduce pain on injection, the amount and frequency of injections, and the purification methods of the active ingredient were all patented so that biosimilar manufacturers could not avoid infringing on them without creating a clinically inferior drug.

The difference between the American and European patent systems has drastic implications for the 65 per cent of Americans who use prescription drugs. The biosimilars and generics market already saves patients and the US healthcare system over $400 billion USD per year, including $136 billion USD in Medicare savings. Further, biosimilars and generics represent 90 per cent of all filled prescriptions but just 13 per cent of prescription drug spending in the US. 

There is room for even more savings. A US House of Representatives report suggested that earlier biosimilar entry would have reduced the price of Humira and saved patients $19 billion USD. Since 37 per cent of Americans earning less than $40,000 USD per year skip prescription medication due to cost concerns, these savings would have benefited the poorest Americans most. Thus, a patent system that gives too much power to Big Pharma is preventing a biosimilars market from making Americans healthier. 

America should eliminate Big Pharma’s ability to acquire patent thickets by creating a regulatory framework similar to Europe’s. First, the USPTO should enforce stricter standards for “non-obviousness” when considering patent filings. Here, non-obviousness refers to the requirement that inventions be patentable only when they build on existing technology. These stricter standards should extend to secondary patents on method of use, dosing, and formulation. The US should also accelerate the adjudication of patent cases by selecting judges with expertise in patent law, as China and the EU have done.

American politicians should also consider more radical modifications to the American patent system. One possibility is to cap the number of patents per product. Another approach, advocated by some libertarian political scientists, is to shorten patent terms to balance incentives for innovation with greater free-market competition. Reforming the patent maintenance fee system is another viable approach, as maintenance fees are often fixed and paid at the beginning of a patent’s term. Instead, a different system could require companies to pay annual taxes on patents, with fee structures based on the value of the patent. This would disincentivize companies from building patent thickets on commercially successful products by forcing them to pay large sums for each patent. All of these changes would weaken Big Pharma by limiting its ability to abuse the patent system and by reducing the threat of litigation costs for biosimilar competitors. Otherwise, if the current patent system stays in place, expect Big Pharma to continue ripping off American patients by abusing patent thickets.

Edited by Sophie Block 

Featured image: Photo by Árpád Czapp is licensed under the Unsplash License.