This week the House Committee on Oversight and Reform is holding a hearing titled “Unsustainable Drug Prices,” the third such hearing from the committee, which appears to be focused on patent abuses. Clearly, there’s no better time to take a deeper dive into brand drug patent thickets.
What is a patent thicket? Even for a health care data wonk like me, sometimes Wikipedia is a helpful resource. Wikipedia describes a patent thicket as “a concept with negative connotations that has been described as ‘a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology…’” This is a pretty apt description in the prescription drug field, where patent thickets are thorny and obstructive, just like a “dense web” might look.
Brand drug manufacturers extend the exclusivity of their drugs beyond the end of their initial exclusivity period by filing multiple additional patents on the same drug, thus creating “patent thickets.” For Humira, Enbrel, Keytruda, Revlimid, and Imbruvica, five of the top-10 selling drugs in the U.S., a total of 584 patent applications have been filed after their initial Food and Drug Administration approval. For example, on Humira there are additional patents on the autoinjector device and a separate patent for the “firing button” on the device. These added patents mean additional years – in the case of one of these drugs, an added 28 years – with monopoly pricing power protected from competition.
For pharmacy benefit managers (PBMs), patent thickets are anti-competitive and obstruct the ability to negotiate for savings, which ultimately means patients are not paying the lowest cost possible for medications. We’ve said this before because it’s very important: the key to lower prescription drug costs is adequate competition in the marketplace.
For brand drugs, the ability of PBMs to lower drug costs hinges on the availability of sufficient alternatives, which creates negotiating leverage through competition. Once drug manufacturers set drug prices, PBMs negotiate with those manufacturers for rebates, which are a key tool in helping to reduce prescription drug costs for consumers. Rebates reduce the overall costs for prescription drugs, thereby generating billions of dollars in savings every year. If there is no competitor on the market for a drug, PBMs lack the leverage to negotiate rebates on brand drugs.
That’s why the drug manufacturer strategy known as patent thickets is so pernicious – it intentionally keeps direct competitor products off the market, sometimes for years or even decades. I’ll leave you with the result: patent extensions for just those same five drugs led to over $500 billion in additional net sales.
Patent abuses hurt everyone, especially patients. Let’s hope the committee’s hearing leads to a broader conversation on drug manufacturers’ schemes that block competition, increase their profits, and lead to higher drug costs for everyone.