The Patent System is Failing to Promote Pharmaceutical Innovation
By Christina Del Greco
The U.S. Patent and Trademark Organization exists to manage intellectual property within the United States, which includes granting patents. While there are multiple types of patents, the most commonly known is the utility patent, or a patent on something that is useful. The requirements for a utility patent are as follows:
- The invention must be new; if someone else has already invented it, or if it has already been disclosed to the public, then it cannot be patented.
- The invention must be non-obvious; based on previous inventions, the new invention cannot be an obvious improvement on prior iterations according to an average person.
- The invention must be useful; for utility patents, the invention must have a purpose that is practical or solves a problem.
- The invention must be patentable material; it must be classified as either a process (a “how-to” guide for doing something), a machine (like an engine), an article of manufacture (like a shoe), or a composition of matter (like a new chemical compound). For example, software that is not expressly tied to a machine is not patentable.
Utility patents are appealing to inventors because they provide exclusivity for 20 years past the patent filing date. However, quite often, pharmaceuticals functionally end up with market exclusivity for much longer.
How do pharmaceutical companies drag out their market exclusivity? They evergreen their products. “Evergreening” is the process of filing a new patent—and therefore claiming a new invention—on drugs that are only slightly different from the previous iteration of the drug. One study found that between 2005 and 2015, 78% of new drug patents filed were not for new drugs, but for existing drugs. Pharmaceutical companies can do this in a number of ways, including filing patents on methods of manufacturing—so that even if the patent on the active ingredient expires, generic pharmaceutical companies must find alternative ways to make that ingredient—or by filing a patent on the same drug with minor alternatives, such as dosage or delivery method, and then advertising to patients that their new version is more effective.
For example, Genentech’s (owned by Roche) biologic rituximab is an anti-CD20 monoclonal antibody treatment for arthritis and cancers like lymphoma, and is often also prescribed for a number of off-label uses such as multiple sclerosis. Rituxan, the brand-name drug, was granted FDA approval in 1997, and one dose could cost upwards of $10,000. The patent for rituximab was granted in 1998, which then expired in 2018. However, in the meantime, Genentech filed patents on two additional drugs: Gazyva and Ocrevus. Gazyva is another anti-CD20 antibody treatment that is designed to treat lymphomas—although perhaps not as effectively as rituximab—and Genentech likely hopes that the market will shift from rituximab to Gazyva to in order to minimize profit loss to generic rituximab biosimilars. Additionally, Genentech filed a patent on Ocrevus, a third anti-CD20 antibody developed to treat multiple sclerosis, rather than seek FDA approval for rituximab to treat MS despite already being used as a treatment unofficially.
On top of all of this, for quite some time, Genentech held the patents for developing antibodies using recombinant DNA technology, which meant that other companies seeking to develop similar treatments had to pay royalties to Genentech to do so. In other words, Genentech has a whole tangle of patents that make developing rituximab biosimilars more difficult and less appealing to other companies.
As a result of these practices, the biggest pharmaceutical companies can amass patents. This makes it more challenging for companies making generic biosimilars to compete, which makes it more challenging to bring prices down for patients. Technically, all of these drugs and biologics satisfy the requirements of “new,” “non-obvious,” and “useful,” (they are new drugs that are not necessarily obvious extensions of the previous version, and if they can improve efficacy then they are, in fact, useful) and can therefore be patented. However, it is hard to see how pharmaceutical innovation can thrive in an industry that only seeks to re-patent their previous drugs based on technicalities.
Pharmaceutical companies justify extending patents and maintaining high drug prices because of the expensive research and production costs involved in developing drugs in the first place. However, while the average profit margin for a company is around 7%, pharmaceutical companies tend to have a profit margin closer to 18%—in other words, increases in drug prices are not essential for keeping research and development afloat, but instead increase overall company profit. In fact, less than a quarter of revenues go towards research and development. Yes, researching drugs is expensive (as most of them fail in development), but it is not expensive enough to justify these practices.
The U.S. patent system as it exists now allows this behavior from pharmaceutical companies, and even encourages it—patents have often been viewed as benchmarks for innovation and scientific progress, so more patents are viewed as a good thing. However, when companies file patents on nearly the same drug over and over again, rather than seeking FDA approval for minor changes and off-label uses, the patent system fails to follow through on its fundamental goal: promoting innovation. As a result, patients are forced to pay exorbitant prices for drugs because generics and biosimilars take longer to come on the market, and patients with conditions that are not as profitable go without treatment because pharmaceutical companies are busy re-patenting their best drugs instead of developing new ones. When it comes to pharmaceuticals, the U.S. patent system enables the perpetuation of self-serving practices based on technicalities alone. Reform will be needed to more stringently evaluate patent applications for truly new and non-obvious material, which in turn will reintroduce competition into the market and ensure that sick patients are able to access and afford the treatment they need.
Cover image from the U.S. government, Public Domain, https://commons.wikimedia.org/w/index.php?curid=2656608
Christina Del Greco is a PhD candidate in Genetics and Genomics and a student in the Science, Technology, and Public Policy certificate program. She is interested in the intersection of biomedical science and policy.