President Donald Trump’s push to force major pharmaceutical companies to slash prescription drug prices is unlikely to succeed, at least without addressing the systemic issue of questionable patent practices that keep drug costs high. This is a deep dive into what patent abuse entails and how industry giants employ these tactics.
The current administration’s attempt to lower drug prices is entirely reasonable. A January 2024 RAND study confirmed that U.S. prices for prescription drugs are nearly three times as high as those in other high-income nations. Furthermore, a July 2023 KFF poll found that a majority of Americans are not confident they can afford their medications, with one-third admitting they have failed to take their medications as prescribed because of the cost.
Trump’s latest ultimatum marks his second attempt to tackle drug prices. During his first term, a similar executive order was blocked by a federal judge on procedural grounds. That measure also sought to compel manufacturers to sell drugs to American patients at significantly lower prices. Now, Health Secretary Robert F. Kennedy Jr. is tasked with proposing rules to tie U.S. drug prices to those in other countries if manufacturers do not voluntarily comply with the Most-Favored-Nation policy.
There is hope that this effort may gain more traction. In a significant move, the Federal Trade Commission (FTC) challenged over 200 junk patent listings on brand-name drugs for asthma, COPD, diabetes, and epinephrine auto-injectors in late May, notifying major pharmaceutical companies that their patents are suspect.
The FTC’s actions are not without merit; the abuse of patent law is a cornerstone of high drug pricing in the United States.
A 2022 analysis of the 10 best-selling drugs in the U.S. revealed that on average, each drug was protected by a staggering 74 patents. Big pharmaceutical companies gain an advantage by exploiting patent laws, as they extend their monopolies and prevent generic drugs from entering the market, thereby keeping prices high for extended periods.
On average, each drug is protected by approximately 140 patent applications, with 66% filed after the FDA initially approved the drug. For instance, as the authors noted, nearly a third of the total U.S. sales for Bristol-Myers Squibb’s cancer drug Revlimid occurred after its core patents had expired. A similar strategy was famously used for AbbVie’s blockbuster arthritis drug Humira.
On average, the top 10 best-selling drugs in the U.S. are protected by four times as many patents as their counterparts in Europe. Consequently, generics and biosimilars for drugs like Humira, Eliquis, and Enbrel were launched an average of 7.7 years earlier in Europe than in the U.S.
In theory, patent expirations pave the way for cheaper generics or biosimilars. However, Big Pharma has mastered strategies to circumvent this by amassing hundreds of patents on their most successful products, creating “patent thickets.” This allows them to maintain monopolies far beyond the standard 20-year term. A study found that from 2005 to 2015, 78% of drugs associated with new patents were not new medicines; the patents were for existing drugs, often with only minor changes.
As the FTC emphasizes, these patent strategies unlawfully delay generic entry, artificially inflating drug prices. FTC Chair Andrew Ferguson stated, “When companies use improper tactics to sidestep competition, it’s American patients who are forced to pay higher prices for essential medicines.”