Bloomberg Law
Feb. 24, 2023, 9:00 AM

Humira Shows That America’s Patent Innovation System Is Working

Andrei  Iancu
Andrei Iancu
Council for Innovation Promotion

A blockbuster anti-inflammatory drug becomes open to competition this year, which is bound to bring down its price. You might think this would be cause for celebration among those worried about high medical costs. Instead, some are trying to turn this moment into proof that the US patent system is broken.

The drug, Humira, is made by the biopharmaceutical giant AbbVie and treats eight conditions, among them rheumatoid arthritis, psoriasis, and Crohn’s disease.

First available in 2002, it was the second-best-selling medicine in the country in 2021, trailing only Pfizer’s Covid-19 vaccine. The first rival “biosimilar” product, Amgen’s Amjevita, came to market last month, with at least seven more expected to follow this year.

The New York Times marked this cornucopia of innovation and imminent competition with a front-page Sunday story—accusing AbbVie of “gaming” and “manipulating” the system to “artificially prop up prices.”

Those are some serious allegations against a company that broke no laws as it invented, brought to market, and improved upon a remarkable medicine that has helped millions of patients.

The story’s chief grievance against AbbVie and other drug companies seems to be that they obtain too many patents, a practice it suggests is anti-competitive and unethical.

Yet these arguments were thoroughly debunked in a court ruling last summer. In August, the US Court of Appeals for the Seventh Circuit upheld a federal district court’s ruling that AbbVie did not violate antitrust laws by obtaining 132 “follow-on” patents for Humira.

The City Council of Baltimore and other plaintiffs representing public health insurance plans sued the drugmaker. As the Seventh Circuit summarized, the plaintiffs alleged that the “sheer number of arguably applicable patents scared off the competitors and enabled AbbVie to collect monopoly profits” in violation of antitrust law.

But in an 11-page decision, the three-judge panel—composed of Reagan, Clinton, and Trump nominees—unanimously demolished the plaintiffs’ argument and demonstrated how the patents don’t, in fact, block competing drugs from reaching the market.

As the Seventh Circuit noted, neither law nor legal precedent limit how many patents a company can obtain. The test to determine whether a patent should be issued depends not on the number the applicant already owns, but on the invention itself—for example, is it useful, novel, and non-obvious?

The more inventive a company is, the more patents it usually gets. Apple obtained more than 2,300 patents in 2022 alone. IBM received nearly 5,000. A single smartphone contains hundreds of thousands of patented technologies—inventions that would not exist if a patent had not at some point nurtured and protected the inventor.

As the judges said with respect to Humira, “If AbbVie made 132 inventions, why can’t it hold 132 patents?” The New York Times doesn’t answer that question.

Our patent and antitrust laws share a common goal: to encourage innovation and spur competition. Without robust patent protections, aspiring inventors would have little incentive to pour their time and money into discovering new products, since rivals could simply steal the fruits of their labor right away.

Patents foster the development of products based on completely new ideas, but they also encourage inventors to continually improve existing products. For example, scientists received a follow-on patent for Lumigan, a popular glaucoma treatment, after developing an improved formula that reduced side effects.

Or consider how the hepatitis C drug Sovaldi served as a precursor to Harvoni, which likewise reduces side effects. Importantly, new patents protect only the new inventions—they don’t extend previously existing protections.

Some have argued that follow-on patents are less deserving of enforcement than patents on new products. But that doesn’t make any sense, considering that improvements to existing products can be critically important to patients.

For instance, when AbbVie’s scientists learned that an ingredient in Humira caused a burning sensation for some patients, they developed a new formulation. They’ve also continually tweaked Humira’s dosage and delivery mechanisms to make the drug easier to administer for more patients.

Each improvement represents a new innovation that AbbVie spent time and money to achieve. And each improved the patient experience, something that should be celebrated.

By rejecting unfounded attacks on the US patent system, last year’s Seventh Circuit ruling made American consumers better off. Now, it seems, the same discredited case must be relitigated, at least in the pages of the Times.

But the real news is that the patent system is well-balanced and working as intended—a wildly popular and effective drug was invented and brought to market.

And now, with its patent protections ending, it is about to face eight competitors. We should not disturb this carefully crafted balance.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Andrei Iancu served as Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office from 2018 to 2021. He is co-founder and co-chairman of the Council for Innovation Promotion.