Case Studies Confirm: Drug Prices Fall When Patent Challenges Succeed

Rachel Burttram | September 24, 2024

The Public Interest Patent Law Institute (PIPLI) is releasing case studies of five prescription drugs that became dramatically cheaper after successful challenges to related patents in proceedings before the U.S. Patent & Trademark Office (PTO). The studies reveal dramatic price reductions - up to 98% - that occurred almost immediately after these proceedings, called Inter Partes Reviews (IPRs), concluded. This evidence highlights the efficacy of IPRs in lowering prices of essential medications when wrongly-granted patents inflate them.

The case studies, based on research by Professor Charles Duan of American University, examine five successful IPRs and their effect on the prices of related prescription drugs. Because successful IPRs culminate in a patent’s cancellation, they remove barriers to competition that previously existed. The removal of these barriers allows entry for competition, which should, in theory, amount to lower prices for affected products. Professor Duan’s research confirms that the cancellation of wrongly-granted drug patents leads to competition that exerts powerful downward pressure on drug prices.

Certain studies also highlight the indispensable role IPRs play and unique benefits they provide when compared to patent challenges in federal district courts. For example, in the case of rivastigmine (a drug used to treat dementia), IPRs were essential to eliminating wrongly-granted patents that were artificially inflating the drug’s price. In IPRs, three administrative judges with technical expertise decide if patents should or should not be cancelled; by contrast, in district court, patent issues are decided by either an individual judge or jury who may or may not have any technical expertise at all.  Because PTO judges have technical expertise, experience, and resources, they can also evaluate patents impartially based on evidence instead of starting with a presumption of patent validity, which gives patent owners an automatic and hefty advantage. In the rivastigmine case, the PTAB also had a better-developed factual record than the district court, which, combined with its technical expertise and impartiality, enabled it to comprehend the evidence correctly. Plus, because of time limits, IPRs can conclude long before district court lawsuits end. ln the case of glatiramer acetate (a drug widely used for multiple sclerosis), IPR proceedings took just over one year, while district courts took almost three.

PIPLI hopes these case studies draw attention to Professor Duan’s research and what it resoundingly shows: successful IPRs lower the prices of related prescription drugs and are indispensable in efforts to lower drug prices and improve access to medicine.

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