Patent challenges can help lower drug prices and create new generic options
Patents have long been a part of the conversation over skyrocketing drug prices and America’s increasingly unaffordable healthcare system. Experts often blame patent “thickets”—dozens or hundreds of patents for one drug—for high drug prices and anticompetitive behavior. But a key reform enacted more than a decade ago, the America Invents Act, established the PTAB as a pathway to administratively challenge the correctness of issued patents before panels of expert administrative patent judges who sit on the PTAB within the U.S. Patent and Trademark Office (USPTO). The intent was to create an “efficient litigation alternative for addressing ongoing questions of patent quality,” Duan notes.
R Street’s report findings suggest a potential relationship between administrative PTAB patent challenges and the speedy entry of generic, low-cost drugs to the market. Using publicly available patent, drug approval and pricing data from the U.S. Patent and Trademark Office, the Food and Drug Administration and the Centers for Medicare and Medicaid Services (CMS), the report demonstrates several key findings: “When a successful drug patent challenge is brought before the PTAB, an average of seven additional products are approved within five years and the price drops by around 20 percent. Within three years of a successful challenge, 16 percent of drug formulations drop by 75 percent or more. Additionally, large price increases—of 25 percent or more—are fairly rare,” Duan explains.
Importantly, this study also finds that PTAB drug patent challenges are not the only cause of these outcomes. These proceedings likely act as part of broader litigation strategies intended to enable generic entry. This suggests that PTAB drug patent challenges play an important role in the healthcare ecosystem.
Duan concludes that, moving forward, any legislation that might limit the usability or availability of PTAB challenges must account for this vital role.