September 25, 2026
Want to lower drug prices? Reform the U.S. patent system
Pharmaceutical manufacturers can exploit the current system, driving up costs. Policy leaders must act.
When it comes to developing medications, the U.S. patent system is designed to encourage research and protect the investments needed to develop and bring new medications to patients.
Unfortunately, drug manufacturers have found ways to abuse and manipulate the system. They use it to extend protections for existing products rather than develop new ones, preserving huge profits at the expense of competition.
This keeps drug prices high and slows real innovation.
In a country where prescription drug spending is projected to exceed $1 trillion in 2026, anticompetitive practices are a major driver of drug prices. These practices harm patients and other health care purchasers.
Patent thickets block innovation
Patent law is intended to reward new and innovative inventions. In practice, however, many manufacturers use additional patents to delay competition for older drugs. Many of these patents cover minor changes rather than meaningful improvements.
As a result, most patents issued by the U.S. Patent and Trademark Office are for existing drugs, not new ones. America’s top-selling drugs have an average of 69 patents each.
These large groups of overlapping patents, known as “patent thickets,” can block competition and keep less expensive alternatives from entering the market.
Patent thickets on just 5 drugs cost Americans more than $16 billion in excess spending in a single year.
The classic example is AbbVie’s Humira, a top-selling injectable medication used to treat arthritis. By 2020 the manufacturer had filed over 250 patent requests, and had earned over $200 billion on Humira since the drug was first approved in 2002. Biosimilars finally became available in 2023.
Product hopping to increase profit
Occasionally, brand-name drug manufacturers will pair additional patents with a tactic known as a “product hop.” This happens when a manufacturer pulls the original version from the market. Patients are then compelled to switch to a new, more expensive version of the drug, often through marketing to prescribers and patients.
Recently, the drug manufacturer Glaukos announced plans to discontinue its drug Photrexa. Photrexa is an eye drop used during surgery to treat a sight-threatening condition that mostly affects adolescents and young adults.
The drug has been used successfully in eye surgery for 20 years and has a wholesale price of about $4,500.
Glaukos plans to replace Photrexa with Epioxa, a new but very similar treatment. The wholesale price of Epioxa will exceed $78,000, more than 17 times the cost of Photrexa. The lamp required to use the treatment will cost an additional $20,000.
For Kaiser Permanente, this change is expected to increase annual spending on this treatment from several million dollars to tens of millions.
The concerns go beyond cost. The new drug was approved based on limited data from 2 clinical trials, and treatment guidelines haven’t yet been established. Researchers also haven’t studied its use in several situations that our eye specialists frequently encounter.
Our approach to delivering high-value drugs
At Kaiser Permanente, we prioritize giving patients access to the most effective therapies at the lowest cost.
When patents expire — or when a court invalidates certain patents, often as part of litigation over a patent thicket — competitors can enter the market. These competitors often offer generic and biosimilar drugs, which typically cost much less than brand-name products.
Biosimilars are highly similar versions of original branded biologic drugs. Generics are chemically identical versions of brand-name medications. Both are safe, effective, and typically cost less. At Kaiser Permanente, we prescribe biosimilar and generics at higher rates than many other health care organizations.
For example, to help patients with Crohn’s disease and ulcerative colitis, we prescribe the biosimilar infliximab rather than the more expensive brand name version 95% of the time. The industry average for use of this biosimilar is just 51%.
Biosimilars typically cost about 30% less than brand-name biologics. Estimates show they reduced drug spending by $20 billion in 2024 alone.
Those savings can help lower the cost of coverage and support other patient care needs. But to meaningfully address the affordability of prescription drugs long term, policymakers must support policies that foster competition and focus on prescription drug value.
Policy change is needed at the federal level
Policymakers can take several steps to promote competition and help lower prescription drug costs. These are some of the steps they can take:
- Address patent thickets, product hopping, and other practices that limit competition. A strong market for generic and biosimilar treatments is essential to lowering drug costs and improving affordability.
- Strengthen standards for drug approvals. We pay far too much for drugs that provide little benefit over existing treatments. New policies should ensure the Food and Drug Administration requires clear evidence that new drugs are safe and effective — and meaningfully improve patient care.
- Expand Medicare’s ability to negotiate drug prices. Thanks to a law passed in 2022, Medicare can now negotiate the price of some of the most expensive drugs that lack competition. Policymakers should allow Medicare to consider the prices charged in other economically developed countries and expand negotiations to include more high-cost drugs without competition.
Patents play an important role in encouraging innovation. With the right policies in place, we can support the development of new treatments while helping ensure drugs remain safe, effective, and affordable for patients.
