The Eliminating Thickets to Increase Competition (ETHIC) Act aims to eliminate so-called “patent thickets” in the prescription drug market — when companies allegedly seek multiple patents on trivial changes solely to block competition. But this simplistic argument misunderstands the strict limits governing the issuance of patents as well as the many safeguards already in place to prevent gamesmanship.
The Myth of Patent “Thickets”
Patent critics often describe groups of patents that protect a single product as “thickets,” suggesting they exist only to wall off competition. But especially in complex industries like tech and medicine, where products comprise many separate and unique inventions, it can be nearly impossible to fully protect a product without securing multiple patents.
Nobody takes issue with the fact that Apple filed around 200 patents for the first iPhone. Yet medicines are often criticized for having many patents, even though they, too, rely on numerous integrated parts: the active ingredient, formulation, delivery mechanism, and so on. The patents on medicines aren’t “thickets.” They each protect a distinct discovery — and each must stand on its own in order to be granted.
So, Why Do Some Patents Look Similar?
Critics often argue that certain groups of patents — those connected by terminal disclaimers — are just duplicates of one another. The ETHIC Act follows that logic by prohibiting patent owners of biopharma patents from enforcing more than one patent from any such group. But that misunderstands what patents linked by terminal disclaimers are.
Terminal disclaimers link related patents, such as ones covering two close variations of a formulation of the same medicine, or ones covering different ways of describing the same variation of a given formulation, and require them to have the same owner and expiration date. That way, even if the patents overlap, the later patent cannot be used to extend the life of the earlier one. Nor can the patents be asserted independently of each other, based on the common ownership requirement. These requirements exist so that these two distinct patents are, in many ways, functionally equivalent to one patent.
Importantly, every patent — whether linked to another by a terminal disclaimer or not — must comply with all the statutory requirements for issuance, including being new, non-obvious, and being described and claimed with sufficient detail and precision. Terminal disclaimer-linked patents are regular patents that are simply subject to some additional restrictions on usage.
Terminal disclaimers don’t allow patent owners to extend exclusivity or gain other advantages by double patenting — they are explicitly intended to prevent it.
Data Disproves the Patent Thicket Narrative
The U.S. Patent and Trademark Office has conducted multiple studies debunking the thicketing narrative. The USPTO has found that:
- There’s no clear relationship between the number of patents on a drug and when generic competitors appear. Since “not every patent or exclusivity has the same scope,” a higher patent count doesn’t necessarily mean a drug has more extensive patent protection. Data further shows that generic access is not hindered — approximately 90% of U.S. prescriptions are filled with generics.
- Drugs’ market exclusivity is often much shorter than critics imply. The drugs the USPTO studied enjoyed, on average, less than 12 years of market exclusivity — well under the 20-year term of a full patent term. Many other studies examining even larger datasets than the USPTO have reached the same conclusion: on average, drugs experience a market exclusivity period notably shorter than the patent term.
- Large patent families are “not commonly found in allowed pharma applications,” though they are present in other industries.
- Large patent families are most common in the “electrical disciplines“ — in other words, high tech. Yet the ETHIC Act does not address these patents at all.
How the ETHIC Act Would Harm Innovation
- Undermine investment incentives: The bill would prevent life science companies from enforcing many valid patents on their products, inviting unauthorized copying and making it far riskier for investors to support future research and development.
- Chill post-approval innovation: The bill would harm incentives for companies to improve existing drugs. Patients could lose out on safer formulations and more convenient drug forms that would otherwise substantially improve their lives.
- Distort the patent system: The bill would skew patenting in unforeseeable ways. It could push innovators to rely on trade secrets over patents, keeping knowledge out of public view. Or it could cause them to simply change patent application strategies to avoid needing terminal disclaimers, likely in ways that would increase the workload at the USPTO, worsening the patent examination backlog and resultant patent issuance delays without any corresponding upside.
- Unravel technology-agnostic patent policy. America’s patent system is technology-neutral, so policies apply equally across industries. This approach enables the strengths of inventions to determine their patentability and commercial success or failure, rather than Washington policies that target certain industries. The ETHIC Act would mark a historic departure from that neutrality.
- Sabotage U.S. leadership: At a time when China is close to overtaking the United States in biotechnology and has done so as a major national priority, undermining U.S. patent protections would put American innovators at a major disadvantage. American companies rely on private capital for R&D — which in turn, depends on reliable, predictable patent rights. China, in contrast, has a state-driven economy that will support its national biotech champions regardless of their patent portfolio.
Bottom Line
The ETHIC Act targets a problem that is not substantiated, according to reports from the USPTO. Groups of patents utilizing terminal disclaimers aren’t anti-competitive “thickets,” but evidence that the patent system’s existing safeguards are already working effectively. Instead of making patents harder to enforce, Congress should protect the incentives that help lead to innovations like medical breakthroughs for patients.