FDA challenges pharmaceutical patents
November 17, 2023
Brand name manufacturers are granted patents for new drugs which gives them a period of market exclusivity where they can charge high prices and reap large margins. This encourages investment in research on new drugs and helps boost innovation. However, pharmaceutical companies often claim a “thicket” of patents on their brand name drugs, giving them a monopoly to sell their drugs for many decades beyond their original drug patent. This is a special problem with delivery devices, like inhalers or pens for self-injection, where patents on elements of the medication other than a drug itself stymie generic competition.
The Food and Drug Administration (FDA) has announced that it will challenge a series of drug company patents in a case that could lead to substantial savings for employer health plans. Current regulations prohibit the FDA from approving a generic drug for 30 months if a brand-name company sues for patent infringement; delisting patents could speed FDA approval of generics. Among the drugs where patents are being challenged are EpiPen (for allergic reactions), Restasis (for dry eyes) and many brand name inhalers for lung disease, including Ventolin, Pro-Air, QVar, Symbicort, Atrovent, and Spiriva.
Extending patent protection can lead to substantial extra profits for drug companies, and dramatically increases costs for purchasers. For instance, Humira (an anti-inflammatory drug) had average revenue of $3.3 billion a year until its primary patent expired in 2016, and averaged revenue of $14.6 billion each year during its patent extension period from 2016-2023.
The US has the highest brand name drug prices in the world, but the lowest generic prices. This increases the importance of challenging patent extensions that delay availability of generics.
Implications for employers:
This FDA action to decrease delay of approving generics for drugs with expired initial patents could eventually lead to billions of dollars in savings.
Price relief from this effort will not be immediate, as it will take some time for these patent challenges to wind their way through the legal system
Stricter scrutiny of secondary patents coupled with Medicare price negotiations for high cost drugs without competition could encourage pharmaceutical companies to spend more resources on new drug development and fewer resources on maximizing revenue from drugs close to the expiration of their patents.
Monday: More promising news on GLP-1 drugs
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