Patent thicket in the crosshairs of the federal government ahead of the 2024 elections

With the prices of prescription drugs explosive political issue In this election year, pharmaceutical companies are coming under pressure from Congress and the Biden-Harris administration for exploiting the U.S. patent system to extend their exclusivity and maximize their profits for as long as possible.

Earlier this month, government regulator Accountable.US published a report detailed how the manufacturers of first 10 prescription drugs Patent laws negotiated under the Medicare Drug Price Negotiation Program of the Inflation Reduction Act have exploited patent laws to extend monopolies and keep prescription drug prices high. At the heart of the controversy is the practice of big pharmaceutical companies filing multiple, overlapping patents for the same product, creating a “thicket” that effectively stifles competition in generics and biosimilars.

The report cites Johnson & Johnson's blood thinner Xarelto as a “prime example” of a patent jungle. The company has filed 49 patents, giving it market exclusivity for over a decade. Another example is Amgen's autoimmune drug Enbrel. The company has filed 57 patent applications for the drug since the drug's launch in 1990, 72% of which were after FDA approval, “with the goal of delaying competition for 39 years,” according to Accountable.US.

However, the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry lobby in Washington, has repeatedly tried to dispel the “myths” surrounding “so-called patent thickets” and “unproven allegations” about abuse of the US patent system by major pharmaceutical companies.

“The narratives about the number of patents and the patent families that form so-called ‘patent thickets’ are based on questionable data and misunderstandings about patent scope,” PhRMA wrote in Comments last month before the US Patent and Trademark Office (USPTO) and objected to a proposed rule This could be a blessing for patent challengers.

Tools in the patent arsenal of pharmaceutical companies

According to S. Sean Tu, professor of law at West Virginia University College of Law, primary patents that protect the underlying active ingredients of a drug are the most effective patents.

“Only 8% of the patents declared invalid are primary patents,” said Tu BioSpace“Basically, you have to wait until the shelf life of these things expires and then generics can try to come to market.”

Secondary patents, which protect formulations, manufacturing processes, methods of use and delivery devices, are used by companies to “enhance” a drug's protection, with the resulting thicket of overlapping patents “playing an outsized role in maintaining monopoly power,” Tu explained.

Because patent litigation is costly and time-consuming, these large portfolios of secondary patents can “complicate and delay competition for generics or biosimilars because manufacturers must ensure that the product does not infringe a patent,” Tu and his co-authors wrote in a Journal of the American Medical Association (JAMA) Research letter Released earlier this month.

The large pharmaceutical companies also use so-called continuation patents. This is a type of application at the USPTO that allows drug manufacturers to add minor clarifications or additions to an earlier application without significantly changing the underlying invention. This makes it more expensive and time-consuming for generic competitors to file patent challenges.

In a analysis published last year in JAMATu and his colleagues found that the number of follow-up patents filed by companies that had made few significant changes to their drugs increased by 200% over a 15-year period.

“The first patent is usually the broadest, and later they use these continuations to get narrower patents – to the point where pharmaceutical companies can look at what their competitors are doing in the market and then tailor their patents to cover competitors' products,” Tu said.

Humira: “The prime example of really bad behavior”

AbbVie's blockbuster anti-inflammatory drug Humira is a case study how large pharmaceutical companies have managed to extend their market exclusivity and high prices for their branded drugs by fending off competition from low-cost rivals. Thanks to an effective patent thicket, Humira is one of the best-selling drugs of all time, generating more than $200 billion in sales during its lifetime.

Tu points out that Humira will reach annual sales of $21 billion in 2022. “If AbbVie gets one day's extension, that's worth $57 million. It costs about $20,000 to file a patent. That's a no-brainer,” he said, calling Humira “the prime example of really bad behavior.”

Of course, AbbVie is not alone. Other pharmaceutical companies have successfully built similar patent thickets to protect their top-selling drugs.

A Senate Health Committee report The study, published in February 2024, concluded that Bristol Myers Squibb, J&J and Merck have built up patent thickets that allow them to “artificially expand their monopolies” while “making it harder for Americans to access cheaper generics and biosimilars.”

According to the report, Merck has filed 168 patents on its successful cancer drug Keytruda – 64 percent of them after the immunotherapy was first given the green light by the FDA – while 57 patents have been filed on J&J's immunosuppressant Stelara, 79 percent of them after approval. BMS, meanwhile, has filed 37 patents on Eliquis, nearly a third of them after FDA approval.

FTC, Congress, USPTO, Target Patents

Critics say these practices underscore the need for legal and regulatory solutions to increase competition and lower drug prices. The Federal Trade Commission (FTC), for its part, has recently stepped up a campaign against patents that it says “improper or inaccurate“ listed in the FDA’s Orange Book registry of approved brand-name drugs.

The Orange Book is designed to help generic drug manufacturers find out when patents on branded drugs expire so they can market generic equivalents. However, in October 2023, the FTC published a Statement of principles It warned companies that it intends to “take action against companies and individuals who improperly list patents in the Orange Book.” In November 2023, the FTC announced it would challenge more than 100 patents owned by 10 pharmaceutical companies, including AbbVie, AstraZeneca and GSK.

Ethan Siegal, founder of The Washington Exchange, which provides policy research to institutional investors and corporations, claims that if Vice President Kamala Harris is elected president in November, the FTC's crackdown on patents will become the new administration's “sleepy topic.” But if Trump is elected president, “we're going to see the FTC pull out of all the biopharma patent work,” Siegal said last week on a conference call hosted by Guggenheim Securities.

On the legislative side, two important bipartisan bills are currently being considered in Congress to curb the pharmaceutical industry's abuse of the patent system.

Last month, the Senate adopted unanimously the Affordable Prescriptions for Patients Act, which aims to limit the number of patents that drug manufacturers can introduce, thereby facilitating market entry for generic and biosimilar competitors. The invoicesponsored by Senators John Cornyn (Republican, Texas) and Richard Blumenthal (Democrat, Connecticut), explicitly limits the number of patents that pharmaceutical companies can assert in patent infringement lawsuits. However, there may be exceptions to this limit, such as how long the product has been on the market.

Senators Peter Welch (D-Vt.), Mike Braun (R-Ind.) and Amy Klobuchar (D-Minn.) introduced similar legislation in January 2024to “streamline drug patent litigation” and encourage competition to lower drug prices. The bipartisan bill would allow drug companies to assert only one patent per thicket in litigation.

Tu called the Affordable Prescriptions for Patients Act “total garbage” due to too many exceptions and exemptions. While he said the second bill is “a good start,” he fears lawmakers will “declare victory and move on” if the Affordable Prescriptions for Patients Act becomes law, adding, “That's not what victory looks like.”

The optimal solution, according to Tu, is the rule proposed by the USPTO in May 2024, which promotes competition by reducing the cost of challenging groups of patents linked by definitive disclaimers, resulting in lower barriers to entry. In a litigation where a patent owner seeks to enforce multiple patents linked by definitive disclaimers, an accused infringer could invalidate all of those patents by invalidating a single claim of one of the patents.

Under the proposed USPTO rule, “if you invalidate one, the whole thing falls apart,” Tu said. “It's a very elegant solution to a very common problem. It's forward-looking in that it prevents these kinds of things from happening in the first place — and that's where a lot of the damage is done.”

PhRMA and the Biotechnology Innovation Organization (BIO) oppose the proposed USPTO rule on the grounds that it is not legally sound and is inconsistent with law and case law.

BIO in its Comments In its response to the USPTO's notice of proposed rulemaking, it called it “politically motivated” and warned of the “far-reaching impact that the proposed changes would have on the U.S. patent system, the innovation-based U.S. economy, U.S. international competitiveness, and the ability of companies to continue to invest the enormous resources required to research and develop new pharmaceutical products.”