Tackling High Drug Prices Requires Patent Reforms, Too
President Donald J. Trump just released his second executive order (EO) addressing high prescription drug prices. This is perhaps a welcome announcement for those who have to pay for prescription drugs on a regular basis. U.S. drug prices remain nearly three times higher than in other countries leaving many Americans struggling to afford their prescribed medications.
However, the president’s actions underscore a broader recognition that the current patent system, particularly in the pharmaceutical sector, often fails to serve its original purpose of promoting innovation and improving social welfare. Instead, patents increasingly serve entrenched interests that wield the power of patents for monopoly gains, not innovation. Pharmaceutical companies routinely employ tactics to maintain artificially high prices long after their original patents expire. If the president is interested in reducing drug prices, patent abuse must also be addressed.
Origin of Patents
That patents are controversial is not surprising. They emerged from “letters patent,” monopoly privileges granted by monarchs to favored interests. Their adoption in the United States was built on this English tradition, with the Constitution granting Congress the power to create a statute promoting “Progress in Science and useful Arts.” Distinct from property rights in tangible property, patents are a right of exclusivity granted to serve the broader public interest. Once the period of exclusivity expires, the invention is available to all.
Over time, however, proponents of stronger patents have attempted to ascribe to them the same qualities as tangible property, removing them from their statutory origins and economic scrutiny. This confusion between privilege and property has made meaningful reform challenging. Indeed, Nobel laureate Friedrich Hayek warned in 1947 that the “mechanical extension of the property concept by lawyers has done so much to create undesirable and harmful privilege.” The harms are clearly visible in today’s patent landscape, where poor quality patents, patent gamesmanship, and excessive litigation reduce social welfare and impede innovation.
Problematic Patent Thickets, Product Hopping, and Patent Trolls
The pharmaceutical industry provides some of the clearest examples of patent abuse. Drug companies routinely file dozens of patents per drug that extend their market exclusivity and deter entry by lower-cost generics. While some may offer improvements in the drug’s performance or delivery, others may be obvious and have little therapeutic value. These “patent thickets” delay competition, keeping drug prices artificially high for consumers, patients, and government programs. One study examining patent thickets on just five popular drugs found that “the cost of this abuse ranges from $1.8 billion to as high as $7.6 billion for each drug in just one year.”
A striking example of these patent games is AbbVie’s Humira (adalimumab), a blockbuster drug used to treat autoimmune diseases that generated $18.6 billion in U.S. sales in 2023. AbbVie applied for almost 250 patents, 132 of which were granted. These covered not only the active ingredient but also factors like the drug’s formulation, treatment methods (such as auto-injector), and manufacturing processes, making it difficult for biosimilar producers to introduce competing products. This effectively extended Humira’s market exclusivity an additional six years beyond the expiration of the main patent and allowed AbbVie to maintain high prices for an extended period. While biosimilar versions of Humira entered the market in Europe, with price decreases from 18 percent to 40 percent, Humira did not see biosimilar competition in the U.S. market until 2023.
“Product hopping” is another tactic that allows pharmaceutical giants to maintain monopolies well beyond the original patent term, often without enhancing therapeutic value. AstraZeneca’s product hop from Prilosec (omeprazole) to Nexium (esomeprazole) provides a clear example of how minor reformulations can be used to maintain market exclusivity that results in higher drug prices. Prilosec, the popular blockbuster drug for acid reflux, faced patent expiry in 2001. AstraZeneca consequently released a new drug, Nexium, that was basically a molecular mirror image of the original that offered no notable new therapeutic benefits. The company aggressively marketed Nexium as the preferred alternative, ultimately driving Prilosec and generic competitors from the market.
Meanwhile, non-practicing entities (NPEs), often called patent trolls, have weaponized patents against actual innovators. They acquire large portfolios of patents, not for innovating or producing anything, but to assert against real innovators in order to extract settlements or licensing fees. A recent study found that NPEs were responsible for 73 percent of all patent litigation in the second quarter of 2022, imposing significant costs on businesses, big and small. Another study found that “firms losing to NPEs (either in court or through settlement) reduce their research and development investment by roughly 20 percent going forward, relative to ex ante identical firms.”
In the quest for patent monetization, the patent system has become weaponized to deter competition and extract rents, a distinct departure from promoting meaningful progress. Reforms targeting these well-known practices can yield a better patent system that encourages true innovation and economic growth. Reform should focus on improving patent quality, eliminating low-value patents, curbing litigation abuse, and embracing alternative innovation incentives like prizes and open standards.
Contradictions Between EOs’ Intent and USPTO and DOGE Actions
The Trump administration is clearly interested in doing what it can to push reform. In April 2025, the administration issued an EO on drug prices that called for intellectual property protections to be “optimized to provide access to prescription drugs at lower costs.” Yet recent actions at the U.S. Patent and Trademark Office (USPTO) may make it more difficult to achieve this goal. Specifically, the acting director of the USPTO reversed earlier guidance, making it easier for the USPTO to deny requests to review the validity of questionable patents. The acting director also announced a new “interim process” that makes it more difficult for members of the public to challenge the validity of a patent, making it harder to challenge patents that keep generics at bay.
At the same time, the Department of Government Efficiency (DOGE)-related cuts may shrink the number of patent examiners and judges who review contested patents at the USPTO despite a backlog of over 830,000 unexamined patents. To date, offers for 600 new examiners have been withdrawn, and another 600 probationary examiners may be at risk, which can have significant implications for the quality of patents granted. Workforce reductions could also impact judges who review contested patents at the USPTO.
These changes can make reform difficult. Ideally, reforms would enhance the examination process to improve the quality of patents while also providing an avenue for invalidating bad patents that should not have been granted in the first place. The USPTO is incentivized to grant more patents, not necessarily better ones, and recent changes will make it even more challenging to identify low-quality patents or remove them, once they have been granted. Implementing changes that reduce the number of examiners and limit the number and scope of patent reviews does not improve the overall quality of patents, leaving many of the concerns raised about the status quo unresolved.
Regressive and Progressive Reform Bills
In Congress, these same tensions exist. Sens. Chris Coons (D-Del.), Thom Tillis (R-N.C.), Dick Durbin (D-Ill.), and Mazie Hirono (D-Hawaii) have reintroduced the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act. This bill would strengthen the hand of patent owners and make it more difficult to invalidate weak or overly broad patents. It would also substantially restrict the patent review process, making it harder to eliminate invalid patents. It would limit who can challenge a patent while also increasing the burden of proof for demonstrating that a patent is invalid. It would become more difficult to challenge secondary patents on pharmaceutical drugs that may not yield therapeutic value but do delay generic entry and keep drug prices artificially high.
Sen. Tillis, Chair of the Senate Subcommittee on Intellectual Property, has also said he will reintroduce the Patent Eligibility Restoration Act (PERA) in the 119th Congress. This bill would overturn a series of Supreme Court decisions in order to expand what can be patented. The Supreme Court has consistently held that “laws of nature, natural phenomena, and abstract ideas” are not patentable, but PERA attempts to upend that position by broadening the definition of patentability in ways that would have significant impacts on innovation in biotechnology, diagnostic testing, and artificial intelligence.
But it is not all bad news. Several promising bills have also been introduced to address problems like patent thickets and product hopping. Sens. John Cornyn (R-Texas), Richard Blumenthal (D-Conn.), Chuck Grassley (R-Iowa), and Durbin recently introduced the Affordable Prescriptions for Patients Act that limits the number of patents that can be asserted when a generic producer challenges a biologic drug. The same senators also introduced the Drug Competition Enhancement Act, which would make product hopping an antitrust violation enforceable by the Federal Trade Commission.
Other legislative reforms have attempted to limit excessive litigation by NPEs. For example, in the last Congress, Reps. Don Beyer (D-Va.) and David Schweikert (R-Ariz.) introduced the Advancing America’s Interests Act to limit the ability of NPEs to end-run the courts by bringing their cases before the U.S. International Trade Commission (ITC).
Originally tasked with addressing foreign patent infringements, the ITC has transformed into a duplicative venue for patent litigation, with significant impacts on American firms. Cases at the ITC are quicker, less costly to file, and wield the power of exclusion orders that ban the importation of allegedly infringing products. These exclusion orders give patent holders significant leverage in negotiations, often leading to settlements exceeding the actual value of patents. The Advancing America’s Interests Act attempts to reform the ITC by strengthening domestic industry requirements, enhancing public interest analysis, and establishing procedural improvements to reduce duplicative litigation and harmonize the agency’s actions with the courts.
Conclusion
Trump is correct to raise concerns about drug pricing. But to truly make a dent in prices, pharmaceutical companies must stop abusing patents for their own gain. Patent reform is not a radical agenda but, rather, a return to first principles. As stated in the U.S. Constitution, patents should promote progress and provide social benefits. Today’s patent policies do not necessarily further this goal, and politics make it even more challenging. Without reform, patents will continue to keep drug prices high while impeding innovation and economic growth.