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How a Drug Company Made $114 Billion by Gaming the U.S. Patent System

Pharmaceutical company AbbVie has blocked competitors from entering the market for its blockbuster drug Humira through legal exploitation of the US patent system. This has allowed AbbVie to increase the price of Humira, the most lucrative franchise in pharmaceutical history, over the past six years and generate $114 billion in revenue since 2016.

The knockoff drug Amgen’s Amjevita is expected to come to market next week in the US, with as many as nine more Humira competitors following this year. One analysis found that Medicare spent $2.2 billion more on Humira from 2016 to 2019 than it would have if competitors had been allowed to start selling promptly. AbbVie’s success with Humira has encouraged other companies to use similar tactics to maximize profits.

NY Times reported:

In 2016, a blockbuster drug called Humira was poised to become a lot less valuable.

The key patent on the best-selling anti-inflammatory medication, used to treat conditions like arthritis, was expiring at the end of the year. Regulators had blessed a rival version of the drug, and more copycats were close behind. The onset of competition seemed likely to push down the medication’s $50,000-a-year list price.

Instead, the opposite happened.

Through its savvy but legal exploitation of the U.S. patent system, Humira’s manufacturer, AbbVie, blocked competitors from entering the market. For the next six years, the drug’s price kept rising. Today, Humira is the most lucrative franchise in pharmaceutical history.

Next week, the curtain is expected to come down on a monopoly that has generated $114 billion in revenue for AbbVie just since the end of 2016. The knockoff drug that regulators authorized more than six years ago, Amgen’s Amjevita, will come to market in the United States, and as many as nine more Humira competitors will follow this year from pharmaceutical giants including Pfizer. Prices are likely to tumble.

The reason that it has taken so long to get to this point is a case study in how drug companies artificially prop up prices on their best-selling drugs.

AbbVie orchestrated the delay by building a formidable wall of intellectual property protection and suing would-be competitors before settling with them to delay their product launches until this year.

The strategy has been a gold mine for AbbVie, at the expense of patients and taxpayers.

Over the past 20 years, AbbVie and its former parent company increased Humira’s price about 30 times, most recently by 8 percent this month. Since the end of 2016, the drug’s list price has gone up 60 percent to over $80,000 a year, according to SSR Health, a research firm.

One analysis found that Medicare, which in 2020 covered the cost of Humira for 42,000 patients, spent $2.2 billion more on the drug from 2016 to 2019 than it would have if competitors had been allowed to start selling their drugs promptly. In interviews, patients said they either had to forgo treatment or were planning to delay their retirement in the face of enormous out-of-pocket costs for Humira.

AbbVie did not invent these patent-prolonging strategies; companies like Bristol Myers Squibb and AstraZeneca have deployed similar tactics to maximize profits on drugs for the treatment of cancer, anxiety and heartburn. But AbbVie’s success with Humira stands out even in an industry adept at manipulating the U.S. intellectual-property regime.

“Humira is the poster child for many of the biggest concerns with the pharmaceutical industry,” said Rachel Sachs, a drug pricing expert at Washington University in St. Louis. “AbbVie and Humira showed other companies what it was possible to do.”

Following AbbVie’s footsteps, Amgen has piled up patents for its anti-inflammatory drug Enbrel, delaying a copycat version by an expected 13 years after it won regulatory approval. Merck and its partners have sought 180 patents, by one count, related to its blockbuster cancer drug Keytruda, and the company is working on a new formulation that could extend its monopoly further.

Humira has earned $208 billion globally since it was first approved in 2002 to ease the symptoms of rheumatoid arthritis. It has since been authorized to treat more autoimmune conditions, including Crohn’s disease and ulcerative colitis. Patients administer it themselves, typically every week or two, injecting it with a pen or syringe. In 2021, sales of Humira accounted for more than a third of AbbVie’s total revenue.

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