Intellectual property law and the battle for pharmaceutical power
By Jake Isakoff
The question of who controls drug prices is not merely a matter of economic policy, but one of legal authority and structural power. Pharmaceutical pricing is largely dictated by intellectual property law, which grants drug manufacturers exclusive rights over their products. However, legal precedents reveal a persistent tension between corporate control, regulatory oversight, and public interest. This tension raises a fundamental legal question: should intellectual property protections enable indefinite market monopolization, or should legal frameworks be modified to promote greater access and affordability?
Patent law provides pharmaceutical companies with the ability to set high prices by granting them a temporary monopoly over new drugs. In Roche Products Inc. v. Bolar Pharmaceutical Co. (1984), the court upheld the broad protections patents give drug makers, effectively blocking generic manufacturers from conducting pre-market research on patented drugs. Roche Products, Inc. held a patent for the drug Dalmane (flurazepam hydrochloride) and Bolar Pharmaceutical Co. intended to produce a generic version of Dalmane after the patent expired. To do so, Bolar needed to conduct pre-market testing with the patented drug to obtain FDA approval. Roche argued that Bolar’s use of the patented drug for these pre-market tests constituted patent infringement, even though the tests were necessary to obtain FDA approval and bring the generic drug to market after the patent expired. The Court of Appeals for the Federal Circuit sided with Roche, ruling that Bolar’s use of the patented drug was not covered by the experimental use exception to patent infringement. The court reasoned that Bolar’s tests were conducted with the intent to bring a generic product to market after the patent expired, which was a commercial purpose, not solely for scientific research. This decision reinforced a system in which exclusivity — not market competition — determines drug prices. The eventual legislative response, the Hatch-Waxman Amendments, allowed generics to begin regulatory approval processes before a patent expires, but the underlying dynamic persists: patents remain the primary mechanism for controlling drug pricing power.
Furthermore, pharmaceutical companies developed methods to extend patent protection beyond the initial term known as “evergreening.” By making minor modifications to existing drugs and filing new patents, companies can maintain exclusivity and delay generic competition. This tactic led to prolonged legal battles, with courts often forced to determine whether such modifications constitute genuine innovation or merely an effort to circumvent the patent system’s intended limitations. While some courts rejected evergreening attempts, inconsistent rulings allow this strategy to persist and keep drug prices artificially high.
Even once patents expire, pharmaceutical companies developed legal strategies to extend their monopolies. FTC v. Actavis, Inc. (2013) brought attention to “pay-for-delay” agreements, where brand-name manufacturers pay generic competitors to delay entry into the market. The Supreme Court held that such agreements could be subject to antitrust scrutiny, but did not prohibit them. The ruling left room for continued, strategic market competition manipulation, thereby allowing drug manufacturers to retain pricing power long after their patents expire. While the Actavis decision curbed some abuses, it ultimately placed the burden of challenging these practices on regulatory agencies and private litigants rather than setting clear prohibitions.
A similar issue arises with biologic drugs, which are more complex than traditional pharmaceuticals and are protected by an entirely different patent framework. Biosimilar competition is hindered by lengthy regulatory approval processes and legal challenges brought by brand-name manufacturers. This results in prolonged exclusivity periods and high prices for biologic treatments, limiting access to patients who need them most. The complexities of biosimilar approval create legal ambiguities that pharmaceutical companies exploit, delaying market competition and keeping life-saving drugs out of reach for many.
The Supreme Court’s ruling in Association for Molecular Pathology v. Myriad Genetics, Inc. (2013) imposed another limitation on pharmaceutical control by striking down patents on naturally occurring genes. This decision underscored that patent law does not grant unlimited authority over medical innovations, particularly when public health is at stake. The ruling, however, did not eliminate broad patent protections for synthetic biologics and complex molecules, leaving considerable pricing power in the hands of pharmaceutical firms once again.
A more recent case, Amgen Inc. v. Sanofi (2023), further restricted the ability of pharmaceutical companies to use broad patent claims to block competition. The ruling clarified that overly broad patents on antibodies could not be used to indefinitely stifle competition, signaling a shift in judicial attitudes toward excessive monopolization. Yet, while these cases mark progress in limiting corporate control, they do not directly address the fundamental issue of how drug prices are set or who should ultimately wield this power.
State and federal governments have attempted to intervene through legislative measures, such as the Inflation Reduction Act, which grants Medicare limited power to negotiate drug prices. However, pharmaceutical companies have already begun challenging these policies in court, arguing that they constitute unconstitutional government overreach. These ongoing legal battles will shape the extent to which regulatory authorities can intervene in drug pricing and whether the public can exert influence over pharmaceutical costs.
These legal precedents, marked by inconsistent rulings on evergreening, pay-for-delay agreements, and biosimilar competition, illustrate the immense power that patent law confers upon pharmaceutical companies. While antitrust interventions and judicial limitations on patentability attempted to moderate this power, they failed to shift the legal framework that enables high drug prices. Courts and lawmakers must consider whether the existing balance adequately serves public health, or whether further reforms are necessary to ensure equitable access to essential medicines. Possible avenues include strengthening antitrust enforcement against anti-competitive pharmaceutical practices, further narrowing the scope of patentable subject matter, and expanding federal negotiating power over drug prices. One potential solution is to reform patent law to limit the extent to which minor modifications can be used to prolong exclusivity. Additionally, implementing stronger price negotiation mechanisms at the federal level — such as those introduced in the Inflation Reduction Act — could counterbalance the monopolistic pricing power granted by patents. Congress could also explore revising the Hatch-Waxman Amendments to close loopholes that allow brand-name manufacturers to delay generic competition through legal maneuvers. Expanding compulsory licensing, which allows governments to authorize the production of generic versions of patented drugs under certain conditions, could also be a way to reduce excessive pricing.
The role of international law in pharmaceutical pricing must also be considered. Trade agreements, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), influence how nations regulate drug patents. Some countries, such as Canada and India, take more aggressive stances in limiting patent protections to promote affordability, raising questions about whether the U.S. should follow in their footsteps. The interplay between domestic and international patent law further complicates the issue and underscores the need for a cohesive legal strategy.
Ultimately, the law determines not only who profits from pharmaceuticals but also who accesses them. As long as intellectual property law remains the dominant force in pricing regulation, corporate interests will continue to shape the cost of life-saving treatments. The legal system must therefore ask itself: should it reinforce monopolistic pricing, or should it realign with broader principles of healthcare justice? The answer to this question will shape the future of drug affordability and access for millions of patients in need. Courts, regulators, and legislators must confront the fundamental imbalance embedded in current patent law and take decisive steps to ensure that the legal system prioritizes public health over corporate profits.
