Do Pharmaceutical Patents Do More Harm Than Good?

By Ikenna C. Ejimonyeugwo

Pharmaceutical patents are the backbone of the modern pharmaceutical industry. They allow drug developers to possess exclusive rights in their inventions for a limited period of time. That exclusivity drives innovation and is critically important to a pharmaceutical company’s return on investment.
Developing a new drug is risky and costly, with recent estimates ranging from $314 million to $2.8 billion. With so much at stake, it is imperative for pharmaceutical companies to secure patents on their drug products to prevent competitors from copying or selling them without permission. A patent safeguards a company’s goal of recouping substantial costs associated with the research, development, and clinical trials of new drugs.
Despite the obvious benefits of pharmaceutical patents, they are also a source of contentious debate concerning issues of unaffordable drug pricing, accessibility to medication, and unfair competition. Many argue that pharmaceutical patents cause more harm than good. For example, given that a patent effectively grants a monopoly over a drug for the life of the patent, patent owners may charge higher prices to secure higher profit, knowing a competing drug or generic version is unable to enter the market during that time. This can be problematic if it causes life-saving medications to become unaffordable.
This article discusses how a pharmaceutical patent works, its role in drug development, and the polarizing impact it has on global health care.
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What Is a Pharmaceutical Patent?

A U.S. patent is a legal right granted by the government to an inventor “to exclude others from making, using, offering for sale, or selling the invention throughout the United States” for a limited time — usually 20 years from the patent’s filing date — in exchange for public disclosure of the invention. See, 35 USCS Section 154.
Pharmaceutical patents are granted for newly invented drugs that are: directed to patentable subject matter; novel or new; useful; nonobvious; and clearly described to enable a person of ordinary skill in the art to make and use the invention.
The process of obtaining a pharmaceutical patent is complex, rigorous and time-consuming. Pharmaceutical companies begin by performing research and development to discover new compounds and therapeutic agents in potential drug formulations. The R&D process generally involves years of laboratory work, animal testing and clinical studies.
Once a new drug or pharmaceutical agent is identified, the inventor can file a patent application with a patent office. The application must include specific details about the invention, such as its chemical structure, the method of production, and the intended therapeutic use. The U.S. Patent and Trademark Office (USPTO) offers guidance and tools to assist with filing patent applications.
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Pharmaceutical Patent Protection Against Infringement

A fundamentally important function of a pharmaceutical patent is the ability to exclude others from the market, i.e., to defend against patent infringement and prevent alternative versions of a drug from entering the market for a specified period of time. Patent infringement occurs when someone makes, uses, sells, or offers for sale a patented invention without the owner’s permission. The owner of the patent may bring legal action against an infringer. To prove infringement, the patent holder must demonstrate that the accused product or process falls within the scope of the claims of the patent. The defendant may counter by arguing that the patent claims are invalid, which often involves arguments that the patented technology existed before the patent owner's filing.
For example, in Amarin v. Hikma, the U.S. Court of Appeals for the Federal Circuit found patent infringement occurred where a company publicized that its generic version of a drug could be prescribed for any FDA approved use, including uses that were protected by a patent held by someone else. See, Amarin v. Hikma, 104 F.4th 1370, 1381 (Fed. Cir. 2024). The case involves Amarin’s VASCEPA (icosapent ethyl) product which was approved by the FDA in 2019 for use as a treatment to reduce cardiovascular risk (CV indication). The FDA approved Hikma’s generic icosapent ethyl for a different, unpatented use (i.e., the treatment of severe hypertriglyceridemia) that is one of the indications for use of the brand pharmaceutical (a so-called “skinny label”). However, Hikma marketed its generic for any approved use of icosapent ethyl, including the CV indication covered by Amarin’s patent.
Specifically, the court reasoned that Hikma’s label for its generic drug suggested that the drug may be effective for patient populations that overlapped the scope of Amarin’s patent and CV indication. This case highlights the importance of securing a patent to defend against patent infringement caused by generic drug companies.
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The Benefits of a Patent in the Pharmaceutical Industry

A pharmaceutical patent offers significant benefits, not only for the innovating company, but also for the broader health care industry. First, a pharmaceutical patent gives a patent holder exclusive rights for a specified time to manufacture and sell a patented drug. This helps to ensure that companies can realize a return from its R&D funding and profit from their investments in new treatments. In addition, a granted patent can enhance a pharmaceutical company's reputation as pioneers of modern medicine.
Further, a pharmaceutical patent encourages the development of new treatments and therapies that can address unmet medical needs. Patents also contribute to the advancement of public health by driving ongoing research and improvement in more effective formulations and safer delivery methods of drugs. Patents ultimately stimulate economic growth by balancing the interests of innovation while fostering competition once patent exclusivity expires which allows cheaper, generic drugs to enter the market.
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Pharmaceutical Patents and Drug Pricing

While patents provide tremendous benefits to inventive entities, ethical considerations may drive Congress to increase regulation of pharmaceutical patents. Some scholars and economists argue that the current patent system has contributed to soaring drug prices, leading to public outcry especially when life-saving medications become unaffordable to many. While patents are essential for fostering groundbreaking treatments, finding a solution to skyrocketing drug prices remains a serious problem for the health care industry.
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Monopoly Pricing Can Limit Access to Drugs

One of the most controversial aspects of pharmaceutical patents is their effect on drug pricing. The exclusive rights a patent gives to drug companies often enables them to set higher prices on pharmaceutical products, as no other competitors can sell the same patented product for the life of the patent.
The high prices being charged are often justifiable based on the colossal investment the innovating company had to sink into developing new drugs, which includes both the cost of developing the successful drug and the cost of numerous failed candidates. Additionally, pharmaceutical companies point out that the profits from one successful drug generate the financial resources necessary to fund new discoveries of medical treatments.
While these justifications are valid, the unfortunate byproduct is that many members of the public in need of healthcare are faced with unaffordable drug prices due to monopoly pricing. This is exacerbated by the rules and limits set by some health insurance carriers, which can exclude coverage for the newest, most effective treatments because they are more costly than existing (but less effective) treatments. This continues to present major barriers to the accessibility of modern medication.
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Evergreening and Scientific Innovation

The concept of evergreening refers to a strategy used by pharmaceutical companies to extend the life of patent protection beyond the term of one or more “original” patents. Companies often accomplish this by making improvements to existing drug products, and then obtaining additional patents for those changes. For example, a pharmaceutical company may make an incremental change to an original drug by altering the release mechanism of a pill (e.g., coating the pill with a time-release layer or including other anti-abuse measures in the formulation). While this can improve safety and efficacy of the medication, the therapeutic effects and active ingredients remain the same.
While this does often lead to improved products, such acts of evergreening can delay the entry of cheaper generic drugs onto the market. This is particularly true if the new product presents a significant improvement over the original product (e.g., if the new product includes modifications that reduce risk of abuse or provide other safety benefits). While a generic company would be free to make the original form of the drug when the original patents expire, in instances where the new version provides a significant improvement, doctors may be inclined to only prescribe the new, improved version, which has the effect of keeping generic companies off the market for longer. This can in turn extend the time period during which the cost of a medication is prohibitive, particularly for individuals with insufficient insurance coverage.
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Solution: Striking the Right Balance

As this article demonstrates, patents for pharmaceuticals provide many benefits due to their ability to drive innovation by allowing pharmaceutical companies to recoup their significant investments and fuel the next round of innovation, but the resulting prices can present some challenges to accessing the newest innovative pharmaceutical treatments. Ultimately, the solution lies in finding the right balance between rewarding pharmaceutical innovation and ensuring that life-saving drugs are sufficiently accessible. Pharmaceutical companies often take steps to help achieve that balance through programs aimed at ensuring access to low-income and underinsured individuals. The continuance, and even expansion, of such programs will be helpful in ensuring this balance continues to be struck.