Dr. Rachel Goode, an executive at a German generic pharmaceutical company, recently argued that “brand-name drug companies are gaming the [U.S.] patent system” by filing duplicative patents meant to block generics manufacturers from entering the market with cheaper copy-cat treatments.
But there’s scant evidence to support that claim. Brand-name drugmakers file patents at a rate on par with, or lower than, other innovative sectors, including the automotive and technology industries.
And if brand-name firms were trying to block generic competition, they’re doing a lousy job. About 90% of all prescriptions filled in the United States are for generic drugs, one of the highest shares in the world. By comparison, generics account for 83% of all prescriptions in Germany, 77% in Canada, 47% in Japan, and just 22% in Switzerland.
The broader thrust of Dr. Goode’s column — that there is a “proliferation of weak patents,” especially in the pharmaceutical sector — is baseless, but unfortunately has increasingly become conventional wisdom. In fact, the Biden administration has embraced the notion, with the U.S. Patent and Trademark Office recently issuing a Request for Comment, motivated by concerns over life sciences patenting, to seek suggestions on possible reforms that’d ensure the “robustness and reliability of patents.”
This notion is not grounded in actual patent practice. The USPTO requires patent filers to show that their innovations are new, useful, and non-obvious before any patents are issued. Filers who can’t clear that high bar never receive patents in the first place.
USPTO employees aren’t infallible, of course. No one is. But they’re generally quite good at their jobs, as evidenced by the fact that fewer than two in 1,000 patents are ever even challenged — a rate that has held mostly steady for a century — let alone invalidated.
Drug patents are particularly strong. Of the tiny share of life sciences patents that are ever challenged in the USPTO’s formidable Patent Trial and Appeal Board, only a fraction are found to have unpatentable claims.
Consider that the USPTO issues roughly 4,000 pharmaceutical patents a year, and each patent can include multiple claims. But in the nearly decade-long stretch from September 2012 to June 2021, out of hundreds of thousands of claims, only 5,136 claims on patents on products listed in the FDA’s “Orange Book” — essentially, the list of FDA-approved drugs — were even challenged. And of that tiny fraction, only 821 (16%) of claims were found unpatentable.
One would think a system that produces so few successfully disputed patents would merit praise, rather than scorn, especially since strong intellectual property protections facilitate both scientific progress and economic growth.
Consider pharmaceuticals. The FDA approved 37 novel drugs last year. In 2021, it approved 50. These included game-changing new treatments for diseases including cancer, ALS, multiple sclerosis, and HIV.
Such breakthroughs wouldn’t be possible without inventors and investors having confidence in the fairness and reliability of the patent system, which protects their ability to recoup hefty R&D investments. It’s no coincidence that as European nations weakened IP protections and adopted other anti-innovation policies, such as price controls, the share of new medicines invented on the continent plummeted. In the 1970s, European labs accounted for the majority of new drug discoveries — now, American labs invent two in three new drugs.
If American policymakers follow Europe’s lead by weakening our patent system, investment dollars will flow to our competitors. That includes China, which is fiercely striving to become a global innovation powerhouse and has repeatedly taken steps to strengthen patent protections in recent years.
Everyone knows the old Southern adage, “if it ain’t broke, don’t fix it.” Policymakers would be wise to heed that advice when it comes to our patent system. It’s the bedrock of America’s world-leading economy.
Frank Cullen is executive director of the Council for Innovation Promotion.