Like food, gas, and other essential products, the public is now paying more for prescription drugs than ever before. In January alone, drug manufacturers raised the price of more than 910 major brand-name drugs by 5% on average, according to the drug price nonprofit 46Brooklyn Research. Between 2011 and 2021, America’s annual spending on prescription drugs increased 64%, from $366 billion to $603 billion.
A major driver of the rising cost of prescription drugs is patent abuse.
America’s patent system is essential to promote new innovations that benefit everyone. In the case of drugs, patents are essential for developing lifesaving and life-improving medications. However, drug manufacturers are increasingly obtaining patents that do not advance new drugs or new innovations for existing drugs. Instead, they are obtaining patents to stymie generic competition so they can raise prices.
Patent abuses force patients to wait years and sometimes decades before they can purchase a cheaper generic version of an expensive brand-name drug. A 2021 analysis of the 12 bestselling drugs in the United States found that these drugs have an average of 74 patents. These patents force patients to wait 40 years before they can access a cheaper generic version of these drugs.
Without generic competitors, drug manufacturers are free to raise prices. Between 2016 and 2021, the makers of these top-selling drugs raised their prices by 44%. In 2021, these drugs, on average, cost $57,000 for every Medicare beneficiary who used these drugs.
Expanding access to generic drugs would dramatically improve the affordability of prescription drugs. Introducing two generic competitors, on average, reduces drug prices by 54%. Four competitors lower prices by 79%, and six competitors lower prices by 95%
Five major changes would expand generic competition and lower drug prices. First, policymakers should abolish the abuse of a patent practice known as ancillary patenting. Ancillary patenting occurs when a drug manufacturer adds new patents to an existing drug by claiming they have added a new feature. In reality, the so-called new feature was a feature of the drug from the beginning. In September, Sen. Mike Braun (R-IN) and several bipartisan co-sponsors introduced a proposal to end this practice.
Second, lawmakers should eliminate another patent abuse called building a patent thicket. A patent thicket is a large group of duplicative patents that drug manufacturers file on their drugs to block generics from entering the market. Most patents inside a patent thicket do not promote an innovation. Unfortunately, it is virtually impossible for competing generic companies to fight these junk patents in court. It takes four to five years for a court to decide a single drug patent dispute, and it costs, on average, $747,000 to litigate a single drug patent. In January, Rep. Jodie Arrington (R-TX) and a bipartisan group of lawmakers introduced legislation to clear away patent thickets.
