The Patent System is a Bottleneck for Medicines

What is a patent and how does it work?

Patents are a type of intellectual property. The three branches of intellectual property law are copyrights, patents, and trademarks. The United States Patent and Trademark Office (USPTO), handles exactly what their name states: patents and trademarks. The U.S. Copyright Office oversees copyrights. Copyright is usually focused on literary and artistic works, like books and music, whereas a trademark is related to items that define a brand, like a logo or tagline. On the other hand, patents are for new inventions such as devices, substances, methods, processes, medical technology, pharmaceuticals, appliances, and mechanical devices.
There are three types of patents: utility, design, and plant.

According to the USPTO, “[a] U.S. patent gives you, the inventor, the right to ‘exclude others from making, using, offering for sale, or selling’ an invention or ‘importing’ it into the U.S. What is granted is not the right to make, use, offer for sale, sell or import the invention, but the right to stop others from doing so. If someone infringes on your patent, you may initiate legal action. U.S. patents are effective only within the U.S. and its territories and possessions.” According to some (including the pharmaceutical industry), this right is considered a necessary incentive to foster the development of new inventions.

Utility and plant patents have a term for up to 20 years from the date the first non-provisional application for patent was filed. A design patent is granted for a term of 15 years from the date of grant. As a patent grants the patentee a monopoly, if the patentee sells the patented product, it can charge what it wants.

As such, patents play a major role in the development of new drugs and are a root cause of high drug prices as well as the delay of new products in a variety of industries.

What can be patented?

Legally, a utility patent may cover “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” whereas a design patent may cover “any new, original, and ornamental design for an article of manufacture.”

Pharmaceutical patents and patent abuse

There are many types of pharmaceutical patents, including product, usage, composition, formulation, process, and combination patents. Pharmaceutical companies engage in a variety of tactics to maintain their monopolies and to keep prices and thus profits high. These tactics include:

Patent thickets

Many pharmaceutical products, including drugs, have many types of overlapping patents. For example, a drug patent usually lasts for 20 years, but brand-name manufacturers can obtain additional patents for other aspects of the drug, such as its formulation, manufacturing processes, and methods of use. This collection of patents is called a patent thicket. Patent thickets can delay or prevent generic and biosimilar drugs from entering the market. This allows manufacturers to keep drug prices high.

In addition to the patents granted by the USPTO, pending and abandoned patent applications can still act as a deterrent against competitors from entering the market. As some abandoned applications can be revived, and as pending applications might be granted, the combination of issued patents and pending and/or abandoned applications creates a web of actual and potential barriers to entry that generic companies are forced to navigate. In our report Overpatened, Overpriced, we evaluated twelve of the bestselling drugs in the United States and found an average of 125 patent applications filed and 71 patents granted per drug, with 38 years of attempted patent protection to block generic competition – nearly double the twenty year monopoly intended under U.S. patent law.

Incremental patenting and evergreening

Because the development cost and failure rate of new drugs is high, many pharmaceutical companies prefer “pseudo-innovation” by way of developing substitute “me too” drugs which are simply trivial formulation changes, types of delivery, or drug combinations that might not be any better than the original medication in order to secure additional patents on a drug that works. This is a process known as incremental patenting or evergreening because it attempts to extend or “evergreen” the exclusivity period of a drug.

Pay-for-delay

Branded drug makers often make financial arrangements with generic drug manufacturers to delay their entry into the market. According to the Federal Trade Commission (FTC), these anticompetitive and illegal practices cost patients and taxpayers $3.5 billion in higher drug costs every year.

Product Hopping

Product hopping is a strategy where a brand-name pharmaceutical company seeks to shift demand from a brand-name drug, especially one that faces generic competition, to a newer one with a longer patent life. The tactics include switching to a new formulation with minor changes (often with little medical benefit) and discouraging the use of the original drug (often by making it harder to get and/or encouraging doctors to prescribe the new version).

Often, companies will use both a soft switch, where they keep the old product/formulation on the market but introduce incentives such as temporary discounts to switch patients to the new product, as well as a hard switch, where companies remove the old product from the market entirely to force patients onto the new product or deem the old formulation “obsolete,” thus forcing patients to the new drug byh making the old one difficult to legally prescribe.

What you can do

At I-MAK, we believe that public engagement is critical to developing solutions that serve everyone – after all, those who are most impacted by unaffordable drug prices should be part of crafting the policies. We use a framework called Participatory Changemaking (PCM) to conduct a multidisciplinary assessment of the patent system through field research, key informant interviews, and convenings. We use the findings to create a series of blueprints for reform, identifying next step opportunities for policymakers to increase equity and inclusion in the patent system.

If you would like to participate in this process or share your story of how you are impacted by the medicines system please contact us.

You can read the newest blueprint for reform here and stay informed by signing up for our newsletter.

Together, we can build a more just and equitable medicines system for all.

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