Patent Misuse in the Healthcare Industry

By Amanda Damayanti

Amanda Vania Damayanti is an exchange student from Indonesia at the University of Pennsylvania. She is currently pursuing a law degree in the Faculty of Law at the University of Indonesia.​​

A patent is an exclusive right, granted for the invention of a product or a process which allows a new or an alternative way to solve a problem. In the healthcare industry, patents are provided to novel pharmaceutical medicine or medical devices. The exclusive right of the patent allows the patent holder to exclude others in making, using, and/or selling their patented product. [1] In order to get a patent for a new medicine or medical device to be sold in the market, one must register through the United States Patent and Trademark Office (USPTO) and then get the FDA’s (Food and Drug Administration) approval.

 
Having a patent provides a competitive advantage against other companies, as well as the incentive to develop and perfect one’s product. Without a patent, there won’t be any monetary reward for the patent holder’s work put into the product; without a monetary reward, innovation will be hindered. [2] Entities will refrain from developing solutions for the problems in the industry, as it wouldn’t seem worth the process.
 
Although patents are useful towards the development of the healthcare industry, they are prone to be misused. One example is that a patentee (patent holder) may try to prevent other competitors from entering the market through artificially prolonging the expiration date of the patents. This may be done through registering a patent for small tweaks in the product, such as for a change in the distribution system or the packaging system. [3] This is a tactic that is played by the patentee to ensure that one can monopolize the market for longer. The action of artificially prolonging patents will hinder generic competitors with lower prices to enter the market. Because of the lack of competition, customers are left to bear the sky-high prices of the monopolized medicines.
 
An example of this “tactic” is practiced by  Regeneron’s product, Eylea, which treats an eye condition called macular degeneration. [4]  The company has a history of registering new patents, including a patent for a minor adjustment in its sterile packaging, keeping competitors from entering the market. For this reason, a single dose of the drug is $1,800, while it is half the price in the United Kingdom. [5] 
           
Similarly, AbbVie, the company producing the anti-inflammatory medication Humira, utilized the same tactics. [6] Humira’s initial patent expired in 2016, but AbbVie registered additional patents for minor adjustments, such as for manufacturing methods and the administration of Humira, which now extends its patents until 2034. [7]
 
Additionally, AbbVie has been rigorously protecting its drug, not only by registering more and more patents, but also by suing competitors with the claim that they have violated AbbVie’s patents. [8] The strategy is to sue would-be competitors for violating patents and reach a settlement agreement. This has worked favorably for AbbVie and the companies agreed to delay their market entry until 2023. As a result of exclusivity and its efforts of protecting Humira’s monopoly, AbbVie has benefitted from the sky-high price it charges for Humira, earning $208 billion since 2002. [9]  As a result, patients are struggling to pay the price of Humira, but continue to do so, as the same drug is not sold on the market under the name of another company. Thus, patients have either decided to give up treatments or delay their retirements to afford the drug. [10]
 
Even so, the Seventh Circuit Court ruled that AbbVie was not engaging in antitrust behaviors for having a large number of patents. U.S. Patent law does not limit the number of patents a company can register, strengthening AbbVie’s position and justifying its conduct. [11] 
 
Regeron and AbbVie are only two companies out of the many employing these patent manipulation tactics. In response, U.S. Representative Pramila Jayapal and Senator Elizabeth Warren urged the Federal Trade Commission (FTC) to prevent patent misuse in September of this year, arguing that it impedes competition and hikes up the prices of drugs. [12] , [13]  The FTC then released a policy statement that says that improper patent listings in the Approved Drug Products With Therapeutic Equivalence Evaluations Orange Book may lead to being investigated for violating the FTC Act. [14]  The policy statement demonstrates how improper listings of patents are harmful for the market and can potentially violate Section 5 of the FTC Act, which prohibits unfair and deceptive acts. [15]
 
On one hand, patents serve as great incentives for innovation, as they allow patent holders to benefit from their hard work. However, patents can be easily misused and act as a “shield” for illegally monopolizing the market. Patent misuse not only harms competitor companies, but also the patients, who more often than not, desperately need the drugs for their treatments. Detailed regulations, close scrutiny, and effective legal enforcements are needed to keep patents from deviating from its original purpose of propelling innovation.
 
 The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.
 
 
 



[1] National Center for Biotechnology Information. "Patent Protection and the Hindrance of Healthcare Management." Accessed on October 23, 2023. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6139778/.

[2]Walden University. "Is Patent Protection Hindering Healthcare Management?" Accessed on October 23, 2023. https://www.waldenu.edu/programs/health/resource/is-patent-protection-hindering-healthcare-management.

[3] Simmons & Simmons. "Antitrust Enforcement Against Misuse of Patent Procedures and Disparaging." Accessed on October 26, 2023. https://www.simmons-simmons.com/en/publications/cl9een9ri70r50a56xcisf8vg/antitrust-enforcement-against-misuse-patent-procedures-and-disparaging.

[4] Time. "The Big Pharma Patent Abuse and Drug Pricing Crisis." Accessed on October 26, 2023. https://time.com/6257866/big-pharma-patent-abuse-drug-pricing-crisis/.

[5] Time. "The Big Pharma Patent Abuse and Drug Pricing Crisis." Accessed on October 26, 2023. https://time.com/6257866/big-pharma-patent-abuse-drug-pricing-crisis/.

[6] Time. "The Big Pharma Patent Abuse and Drug Pricing Crisis." Accessed on October 26, 2023. https://time.com/6257866/big-pharma-patent-abuse-drug-pricing-crisis/.

[7]Bloomberg Law. "AbbVie's Humira Patent Portfolio Not an Antitrust Violation." Accessed on October 27, 2023. https://news.bloomberglaw.com/ip-law/abbvies-humira-patent-portfolio-not-an-antitrust-violation.

[8]The New York Times. "Amgen argued that most of their own versions of Humira." Accessed on October 27, 2023. https://www.nytimes.com/2023/01/28/business/humira-abbvie-monopoly.html#:~:text=Amgen%20argued%20that%20most%20of,their%20own%20versions%20of%20Humira.

[9] The New York Times. "Amgen argued that most of their own versions of Humira." Accessed on October 27, 2023. https://www.nytimes.com/2023/01/28/business/humira-abbvie-monopoly.html#:~:text=Amgen%20argued%20that%20most%20of,their%20own%20versions%20of%20Humira.

[10] The New York Times. "Amgen argued that most of their own versions of Humira." Accessed on October 27, 2023. https://www.nytimes.com/2023/01/28/business/humira-abbvie-monopoly.html#:~:text=Amgen%20argued%20that%20most%20of,their%20own%20versions%20of%20Humira.

[11] Bloomberg Law. "AbbVie's Humira Patent Portfolio Not an Antitrust Violation." Accessed on October 27, 2023. https://news.bloomberglaw.com/ip-law/abbvies-humira-patent-portfolio-not-an-antitrust-violation

[12] House of Representatives - Pramila Jayapal. "Warren and Jayapal Urge FTC to Rein in Big Pharma Abuses of Patent System." Accessed on October 27, 2023. https://jayapal.house.gov/2023/09/14/warren-jayapal-urge-ftc-to-rein-in-big-pharma-abuses-of-patent-system/.

[13] Federal Trade Commission. "FTC Issues Policy Statement on Brand Pharmaceutical Manufacturers' Improper Listing of Patents." Accessed on October 27, 2023. https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-issues-policy-statement-brand-pharmaceutical-manufacturers-improper-listing-patents-food-drug.

[14] Federal Trade Commission. "FTC Issues Policy Statement on Brand Pharmaceutical Manufacturers' Improper Listing of Patents." Accessed on October 27, 2023. https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-issues-policy-statement-brand-pharmaceutical-manufacturers-improper-listing-patents-food-drug.

[[15] Federal Trade Commission. "FTC Issues Policy Statement on Brand Pharmaceutical Manufacturers' Improper Listing of Patents." Accessed on October 27, 2023. https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-issues-policy-statement-brand-pharmaceutical-manufacturers-improper-listing-patents-food-drug.