Brand-name drug manufacturers appreciate the value of their patents, which give them virtually monopoly pricing power. So, to keep drug prices high, pharmaceutical companies have come up with a number of ways either to ensure that their brand-name drugs continue to remain on patent or to keep generic pharmaceutical companies from manufacturing their drugs once they go off patent. The Commonwealth Fund has a new paper that explains these strategies in detail, along with recommendations for Congress to ensure fair drug prices.

Drug company tactics for maintaining their patents and, along with them, market exclusivity for their drugs:

1. Secondary patents: Before a drug goes off patent, the manufacturer patents the drug with a new coating, or with a new frequency of use or a new administration method.
2. Settlements with generic drug manufacturers who are challenging their patents: In a nutshell, through a “reverse-patent settlement,” the brand-name manufacturer pays the generic drug manufacturer to drop the patent challenge and agree not to bring the generic drug to market for some defined period of time beyond the patent’s life.
3. Preventing generic manufacturers from getting samples of their brand-name drugs, which are needed for the generic drug manufacturers to show the FDA the bio-equivalence of the generic drugs.
4. Petitioning the FDA not to approve generic drug applications on the ground that there is an inadequate showing of bioequivalence. The brand-name manufacturers usually lose these petitions.

To address these issues,

1. The U.S. Patent and Trademark Office should prevent brand-name pharmaceutical companies from securing secondary patents for non-material drug modifications.
2. Congress should forbid reverse-patent settlements on the grounds that they are anticompetitive and violate antitrust laws.
3. Congress should pass legislation that requires brand-name drug manufacturers to share samples of their drugs with generic manufacturers.