AbbVie’s blockbuster Humira held 105 patents, shielding the anti-inflammatory drug from biosimilar competition for more than 20 years. Proposed reforms could help prevent companies from extending exclusivity with such patent thickets.
Drug companies frequently exploit patent laws to extend their monopolies and maintain high prescription prices. One common tactic is to obtain numerous overlapping patents covering variations of the same product, creating a “patent thicket” that stifles generic and biosimilar competition. We find that two policies put forward this year would help competitors challenge non-innovative patents within a patent thicket.
AbbVie’s blockbuster anti-inflammatory drug Humira is a case study of this practice. AbbVie shielded Humira from biosimilar competition for 21 years by suing potential competitors with a massive portfolio of at least 105 patents. This strategy helped make it one of the highest-grossing drugs of all time.
Humira, like many drugs, had only one primary patent covering the active ingredient. Companies like AbbVie establish patent thickets by filing secondary patents on obvious variations of original patents, including new formulations, treatment methods or manufacturing methods. Such secondary patents increase transaction costs for potential competitors, but they contribute little, if any, benefit to society.
Typically, the U.S. Patent and Trademark Office (USPTO) rejects obvious patents that cover material an inventor already patented. This rule is designed to prevent inventors from filing multiple staggered patents to prolong protection on a single invention.
However, a procedural workaround called a “terminal disclaimer” permits companies to obtain obvious patents by agreeing to an early expiration, synchronized with another patent in the drug’s portfolio. The obvious secondary patent serves as an additional hurdle for competitors even without prolonging patent protection.
Terminal disclaimers are routinely exploited to secure multiple patents on the same subject. Almost half of small-molecule drug patents and one-third of biologic drug patents are subject to terminal disclaimers.
Policymakers have considered targeting terminal disclaimers. In May 2024, the USPTO proposed a rule stating that if a patent were invalidated, all downstream patents linked to it by terminal disclaimers would become unenforceable. However, this proposal was withdrawn earlier this month following widespread industry criticism. Similarly, a bill sponsored by Senators Peter Welch (D-VT), Mike Braun (R-IN) and Amy Klobuchar (D-MN) would limit patent holders to asserting one patent per group of patents linked by terminal disclaimers in litigation.
These proposals would effectively promote competition by limiting the power of patent thickets and deterring their creation. Specifically, the Welch bill would work to limit the harms caused by already established patent thickets. The withdrawn USPTO rule would have prevented creation of these patent thickets in the first place by forcing brand-manufacturers to strategically file only their strongest claims.
Modeling the Impact of New Rules
Our recent New England Journal of Medicine article shows how the now-withdrawn USPTO rule and the Welch-Braun-Klobuchar bill could help lower the barriers to entry for generics and biosimilars. In it, we applied each rule to two blockbuster drugs: AbbVie’s Humira and Celgene’s small-molecule multiple myeloma drug lenalidomide (Revlimid). Both are examples of how pharmaceutical companies have used patent thickets with terminal disclaimers to extend market exclusivity and stave off competition from low-cost competitors. Humira’s thicket included a whopping 436 terminal disclaimers. Revlimid’s portfolio of 30 patents with 18 terminal disclaimers insulated it from generic competition well past the primary patent’s expiration date.
We showed that the proposed USPTO rule could have reduced the Humira thicket by 43% if a competitor successfully challenged the active ingredient patent and just five leading patents referenced by large numbers of terminal disclaimers. Similarly, application of the proposed USPTO rule could have cut the Revlimid thicket by 70%. When patents are invalidated through litigation, subsequent biosimilar or generic firms do not have to challenge these patents. Because subsequent competitors can “free ride” off of the initial litigation, prices can go down faster due to increased competition.
This outcome suggests the USPTO’s rule could have deterred the formation of patent thickets. Drug firms would be incentivized to be more selective in filing patents since one low-quality patent could bring down many other patents within the family if invalidated.
The Welch-Braun-Klobuchar bill uses a different strategy, limiting the number of patents brand firms could enforce in litigation. Our analysis showed that the bill would have restricted AbbVie to suing potential competitors with a maximum of 24 patents instead of 105 and limited Celgene to a maximum of 12 patents instead of 30.
The best solution may be a combination of the strategies proposed by the USPTO and Congress. Applied in tandem, the USPTO rule could deter companies from building large patent thickets in the first place, while the Congressional bill would limit the number of patents brand firms could enforce from their existing thickets.
Significantly, neither proposal would threaten the incentive for legitimate innovation because they selectively target non-innovative patents that are obvious variations on previously filed patents. With the USPTO proposal withdrawn, Congress is best positioned to address the harms caused by patent thickets, promote competition and ultimately reduce drug prices for consumers. Our research indicates that targeting drug patents linked by terminal disclaimers could be an effective way to help lower costs and increase access to medicines. It is now up to legislators to act.
