AbbVie’s Humira: The poster child for how drug companies abuse the patent system to keep drug prices high. But only for Americans.
Humira is a medicine that treats a number of conditions and is widely prescribed and used by millions of people around the world. It is the most profitable drug in history. Like many brand name drugs, it is also very expensive, but it is particularly expensive here in the U.S. In fact, in Europe and elsewhere all around the world, people who have been prescribed Humira have the option of paying up to 80% less than we do in the U.S. by purchasing a generic version. To make matters worse, AbbVie, the drug company that makes Humira, actually increased the price of Humira in America by 6.2% in January, 2019, to make up for those price reductions overseas.
Why are Americans paying so much more for Humira (and hundreds of other brand name drugs) than people in Europe and elsewhere? Because Humira faces no competition from generic alternatives, even though a safe, low cost version of Humira was originally supposed to be available to American patients all the way back in 2016. Here’s why:
When drug companies create new medicines, they seek patents to protect their exclusive right for a set period of time to reap the benefits of what it is they have developed. Inventors of many products, including drugs, seek patents all the time, and it is this exclusive benefit to reap the rewards of an invention that drives innovation. Patents typically last for 14 or 20 years, depending on what is being patented, and during that time, the inventor has a monopoly of the sale of their invention. After the patent expires, however, and the inventor has reaped the monopoly benefits, the law allows others to produce those products as well.
When it comes to a drug, it’s critically important that the patent system be allowed to function as intended, as many drugs are so expensive. Once the patent on an expensive drug expires after 20 years, generic versions of that drug can be manufactured and offered to patients at a savings of 80% – or more – when compared to the brand name version.
This, unfortunately, is where the abuse of our nation’s patent system by big, brand name drug makers typically starts. The drug companies have every financial incentive to put off the date when their patents expire until as late as possible. Every day they can keep their monopolies in place can be worth millions of dollars in profits. Every year they can keep those monopolies on expensive, urgently needed drugs can be worth billions. Humira, for instance, earned over $20 billion in sales worldwide last year.
Even though Humira’s patents were set to expire in 2016, which should have been when less costly generic versions would come to the market, a very few years before that expiration date, its maker, Abbvie, suddenly started applying for new patents. In these new patents – dozens and dozens of them – Abbvie was asserting that tiny, virtually meaningless changes to their drug and Humira’s method of administration somehow represented significant new “inventions” and were worthy of new patents and new 20-year monopolies. This practice is commonly known as evergreening.
Many of these patents were actually granted. And as time went on, they kept applying for more and more patents, pushing their monopoly expiration date from 2016 all the way out to 2039. That would mean 23 more years of patients paying up to $38,000 year each annually for a drug they needed. Even with discounts and rebates available to many patients, Humira still costs nearly $6,000 a year.
AbbVie is actually quite proud of its legal strategy of exploiting patents to extend it’s US monopoly. In a investor call last September, AbbVie’s CEO boasted “You’ve seen us execute very nicely with our legal strategy and the settlements around the U.S. events to delay the onset of [loss of Humira’s monopoly] into the 2022-2023 time period.” In an earlier call, CEO Rick Gonzalez said it wouldn’t be easy for those to challenge its ‘patent thicket.’ “The strategy that we have in place is not one that hinges on one or two patents.”
It is not surprising that Humira’s patent thicket strategy is the envy of big pharma. Ronny Gal, an investment firm research analyst, said at a 2016 conference of makers of biosimilars: “I’m pretty sure every CEO in biopharma sent that to their head of IP [intellectual property] and said, ‘Can we do that?’”
In fact, they all have. Nearly every brand drug maker and biologic drug company that sells products in the U.S. has applied for dozens or even hundreds of patents to extend their monopolies beyond their original patent’s expiration dates.
Humira is the test case for patent abuse in the US, and it’s a big reason why CAPA was founded. If we can get America’s patent policy right, protecting only the original inventions and not attempts to game the system, then we will be able to enjoy the same savings that patients in Europe and the rest of the world are getting today. If we do not stop drug companies from abusing our patent system for their own profit, other drug companies will continue to flock to this strategy and America’s drug prices will continue to be the highest in the world.
CAPA is seeking common sense, bipartisan solutions so that U.S. patients are not forever stuck paying the highest drug prices in the world. This is not a case of other countries “free-loading.”
It is a matter of stopping big pharma from putting America last by making our patent policies harder for them to exploit. That means cracking down on evergreening by having the U.S. Patent and Trademark Office much more carefully review pharmaceutical patent applications – particularly those submitted after the first patents are granted – to make sure the truly cover “new, novel and non-obvious” inventions that are genuinely critical to improving patient health and outcomes. And not approving meaningless dosage changes, administration methods (“your exact same drug used to be a pill, but now it’s a strip that goes under your tongue!”), or the packaging it comes in.
CAPA also hopes to do away with product hopping, a drug company tactic in which they will actually withdraw a perfectly good drug from the market to prevent generic competition by forcing patients to switch to their new formulations of that same drug, with new patents, even though it often has little or no therapeutic difference.
And we strongly support strengthening the administrative tools for reviewing patents by the U.S. Patent and Trademark Office created by Congress as part of the bipartisan America Invents Act. These administrative patent review tools, known as an inter partes review (IPR), are the best way for generic drug companies to eliminate some of the weakest, low quality patents that PTO should have never granted that drug companies use to keep generic competitors from offering lower cost drugs to patients.
When it comes to Humira, other countries are doing a much better job of lowering the cost of the best selling medicine in the world and they are doing it through competition. America needs to do the same. The best way to create competition and lower drug prices is by stopping pharma abuse of our nation’s patent system.
To learn more about how Abbvie and other drug companies use patents to protect their monopolies, click here to see this outstanding Bloomberg News piece.