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Drug Patents: Impeding Access and Enabling Innovation?

Intellectual property protection is a power enshrined in the Constitution, intended to enable the U.S. government to reward the efforts of inventors and encourage further innovation. Patent protection can provide the creator of a product with control over its manufacturing, distribution, and marketing for a certain period of time, typically 20 years. However, when these policies are applied to the pharmaceutical industry, complex questions emerge regarding how to balance the rights of inventors over their product with patients’ need for accessibility to lifesaving treatments. This paper will explore this question with a focus on the principle of justice and the value of innovation, as well as the responsibilities of various stakeholders in the situation to create a better healthcare future for all.


Table of Contents

  • Abstract

  • Introduction

  • Background on Prescription Drug Research and Development

  • The Inflation Reduction Act

    • Medicare Drug Price Negotiation

    • Cap on Insulin Out-of-Pocket Costs

  • President Biden’s “March-In” Framework

    • Key Stakeholders

    • Justice

    • Value of Innovation

    • Responsibility of the Pharmaceutical Industry

    • Responsibility of the Government

  • Ethical Analysis

  • Conclusion


Introduction

The average patent term life for a pharmaceutical drug in the United States is 20 years. This is the period of time where the patent holder has control over the manufacturing, distribution, and marketing of the product. There are a myriad of strategies that pharmaceutical companies commonly use to extend their period of market exclusivity. For example, companies may obtain multiple patents for a single product, thus granting them control over the product even once the original patent expires; these include patenting new formulations that are significantly changed from the original, developing different methods of administration, or finding uses of the drug for different diseases. Moreover, although it will not be explored deeply in this paper, companies controversially even pay generic competitors to stay out of the product’s market for a set period of time. These efforts are due to the fact that the most profitable period on a compound for the patent holder is while they have market exclusivity. While some uphold that patent protection returns investments to the original developer and fuels the cycle of pharmaceutical research and innovation, others argue that the manipulation of the system to extend the period of exclusivity results in an unjust monopoly that drives up drug prices and creates barriers to accessibility. This paper will focus on drug pricing and patent protection of pharmaceutical products in the United States, although discussions over this issue are not limited to just this country. This paper will highlight two recent developments that may have a significant impact on the pharmaceutical industry and the obtaining of patents: the Inflation Reduction Act, as well as the recently proposed “march-in framework” by the Biden administration. This paper will present an ethical analysis of current practice regarding intellectual property in the pharmaceutical industry using the bioethics principle of justice, as well as the ethical considerations of the value of innovation and respect for property rights. Finally, using the two specific examples as a foundation, this paper will offer a conclusion regarding the proposed central question: to what extent does the U.S. government have a responsibility to establish and enforce ethically appropriate uses of intellectual property protection in the pharmaceutical industry, if doing so will result in sacrifices regarding the pace of innovation in American society? At the end, this paper will conclude that the federal government has the responsibility to engage with and negotiate directly with drug manufacturers to ensure that drug prices do not exceed a determined maximum fair price, accounting for both the resources and innovation invested by the creator and the accessibility of the product to the broader public.


Background on Prescription Drug Research and Development

The process of developing a new compound and conducting clinical research requires immense resources. There is great financial investment by pharmaceutical companies, which can incur substantial losses as a result of investing in products that never make it to the market. In fact, according to the American Society for Biochemistry and Molecular Biology, more than 90% of drugs that enter clinical trials never make it to the market (“90% of Drugs Fail Clinical Trials”). Moreover, the total average cost for a pharmaceutical company to develop a new compound and bring it to market is estimated to range from 1.3 billion to 2.8 billion dollars. Combined, 80% of a pharmaceutical company’s revenue comes from their patented products.


Patent power in the United States is considered a component of the right to property and is ingrained in the Constitution itself: “The Congress shall have power [...] To promote the progress of [...] usual arts, by securing for limited times to [...] inventors the exclusive right to their [...] discoveries” (“Constitution of the United States,” art. 1, sec. 8).  The first patent statute was enacted in the U.S. in 1790, and has only been revised three major times: in 1793, 1836, and 1952. The U.S. Patent and Trademark Office (USPTO) was established in 1836 as an administrative body to examine the validity of patents, and currently employs more than 13,000 citizens (“Why Choose Us”). In recent years, the USPTO has processed more than 600,000 utility patent applications annually, and the average patent takes around 22 months to process (“U.S. Patent Activity”). The average patent takes around 22 months to process. In the 2022 report “Intellectual Property and the U.S. Economy: Third Edition” by the USPTO, it was found that intellectual property intensive industries in the United States  accounted for 41% of its gross domestic product and 44% of its employment in 2019. As stated by Secretary of Commerce Gina Raimondo, this report underscored that “intellectual property protection is vital for American innovation and entrepreneurship” (“Latest USPTO Report”).


There are two main theories that can be used to justify patent protection. The first theory is bargain theory: believes that people will be more encouraged to create new inventions if they are incentivized by a reward, a theory supported in part by the Constitution, the free market system, and even common sense. Countries having less developed patent systems than the United States have also had lower numbers of patented inventions, although there may be the confounding variable that these countries are almost always also less economically developed than the US (Miller 21).


The process of obtaining a patent and criteria that must be met are complex and lengthy. Pharmaceutical companies can obtain a product patent (the chemical itself) or a process patent (the ways the product is manufactured, administered, or used). More generally, there are four main categories for patents: “process, machine, manufacture, or composition of matter” (Patent Act, Section 101). The “America Invents” Act of 2011 (AIA) drastically changed the U.S. patent system, most importantly by adopting a “first-to-file” system to replace the “first-to-invent” system. Following this, we provide a brief description of the application process and guidelines.


In general, an individual or company seeking a patent must demonstrate that their product or process is “new, useful, and nonobvious” (Miller 13). Applicants normally begin by writing and submitting a provisional application, a placeholder for the full application. A provisional patent establishes the “priority date,” or the first date that the patent was filed, which could be very important if a legal battle arises between different inventors with similar inventions. The provisional patent is abbreviated but still contains the two most important parts of a patent application: the specification and the claims. The specification is a description of the product, what it will do or how it will be used, and illustrates its novelty (why it is a “nonobvious” creation). The claims are the asserted “new, useful, and nonobvious” features of the product, and are what the inventor actually obtains patents for. An advantage to filing a provisional patent is that there is a 12 month grace period before the inventors have to file the nonprovisional patent, giving them time to engage in public use or sale, garner resources or funds, as well as obtain other necessary information. Next, 12 months later, a full “non-provisional” patent application must be filed that includes the full set of claims, laying out the boundaries of the invention. Note that the patent term is measured from the filing date of the nonprovisional application which, again, is an average of 22 months, although this can be expedited if a product is eligible for a prioritized review that takes six to 12 months. Frequently, the patent application process and the FDA review process overlap, meaning that the inventor cannot begin marketing or profiting off the product until much of the patent term has already passed. The next step will come 16 months later. After an initial examination is made of the nonprovisional patent application, an initial office action of allowance may be made, but more commonly the inventor will receive a complete or partial rejection. If the patent is rejected, the inventor can either modify their claims and resubmit the application, or contest the rejection by presenting new evidence to respond to the examiner’s feedback. Usually, there will be multiple back- and- forths between the patentee and the examiner before a patent will be allowed. Moreover, Congress requires certain patent applications to be published 18 months after they are filed, even if no patent has been granted yet, such as if applications have also been submitted to other countries.


Inventors are barred from double patenting, or obtaining more than one patent for a single invention. However, they frequently find ways around this in order to extend their patent protection as far as possible. For example, they may break up one invention into multiple separate features and secure a series of patents for the different features. The financial cost of obtaining a patent can also be high. The average cost to obtain a pharmaceutical patent in the United States is 2.5 million dollars according to Bloomberg Law.


Many pharmaceutical companies use a myriad of strategies in order to prolong their period of patent protection, in particular obtaining multiple different patents on a product. For each new patent, the company must conduct clinical trials and secure FDA approval, just as with the approval of the original use. This paper selects and describes three strategies that pharmaceutical companies commonly use to extend their period of patent protection and exclusivity. First, companies can patent a new formulation of an existing product, for example, they can reduce the dosage, improve the outcomes of the drug, or reduce side effects. Next, companies can patent new routes of administration. For example, the migraine treatment drug Imitrex (sumatriptan) accounts for more than $1 billion in annual sales for the company that manufactured it and could be taken through injection. The patent directed to the original compound was set to expire in 2006, so in an effort to extend patent protection and maintain its market share, they developed and obtained FDA approval and patents directed to Imitrex formulations for intranasal delivery. Finally, a company can patent a new use for a drug. For example, the drug atomoxetine was originally patented as a treatment for depression, but later, a new patent was obtained for its use as a treatment for ADHD. So all three of these strategies can extend the period of exclusivity on a drug and block generic competitors from entering the market. As a matter of fact, these strategies are so commonly employed that more than 78% of new patents are not on new drugs, but rather existing compounds. A recent national report revealed that, on average, there were 140 patents filed and 74 patents granted for just the top 10 highest selling drugs in America. About 66% of these patents were filed after FDA approval of the compound, meaning they were on track to sell in the market, and many of the applications were for very minor product modifications. In fact, the FDA has a book of patents known as the “Orange Book,” and having a listing in this book blocks generic competitors. The Federal Trade Commission (FTC) recently challenged more than 100 patents in the FDA’s Orange Book for having improper listings, implying the companies used improper tactics to attempt to extend their period of monopoly over their product. 


The Inflation Reduction Act

A. Medicare Drug Price Negotiation

With 70% of Americans reporting that lowering drug costs is their highest health priority, Congress and the Biden Administration have begun taking greater steps to improve accessibility to drugs. In the following two sections, this paper will analyze two recent developments in the area of drug pricing connecting to intellectual property protection that will have a large impact on how these systems work.


The Inflation Reduction Act (I.R.A.), passed in 2022, was a sweeping piece of legislation with multiple aims including tamping down inflation, imposing corporate taxes, counteracting climate change, and enacting healthcare reforms. More specifically, the I.R.A. had a significant impact on the interactions between governments and drug manufacturers. Under the I.R.A., the Centers for Medicare & Medicaid Services (CMS) will annually select a number of high-expenditure drugs covered by Medicare (currently 10 to 20) without generic or biosimilar equivalents and negotiate a “maximum fair price” for each drug. The selection or eligibility criteria for products subject to price negotiation are as follows:


  • Research and development costs on the manufacturer

  • Unit costs for production and distribution

  • Amount of federal financial support provided to the manufacturer

  • Pending or approved patent applications and exclusivities before the FDA

  • Costs and comparative efficiency of therapeutic alternatives


The selected drugs will also be chosen from a list of the top 50 most expensive Medicare Part D drugs and the top 50 most expensive Medicare Part B drugs. Then, the “maximum fair price” is capped at the lowest of the following values:


  • A percentage discount off a drug’s non-federal average manufacturer price (non-FAMP) for 2021 increased by inflation

  • A percentage discount off the average non-FAMP for the year prior to selection (for 2027 and onward)

  • The prior year’s Part B or Part D payment for the drug


By some estimates, the negotiation program could reduce drug prices for the selected products by as much as 65% (“The Inflation Reduction Act’s Drug Pricing Provisions”).

The I.R.A. also gives the CMS authority to enforce the provisions of the Act. If the manufacturer does not comply, they must withdraw all of their products from Medicare and Medicaid, or else face a steep excise tax. Considering that about half of a manufacturer’s profit can come from programs run by the federal government such as Medicare or Medicaid, this is a very significant consequence. Moreover, if a manufacturer agrees to negotiate but fails to comply with the terms of the created agreement, they will be subject to monetary penalties up to $1 million dollars per day.


President Biden recently announced the first 10 drugs that will be subject to price negotiation under the Inflation Reduction Act.  They include treatments for diseases that impact millions of Americans such as diabetes, heart disease, blood clots, and rheumatoid arthritis. These new prices will not take effect until 2026, however the announcement of this list has indicated a tangible beginning to government negotiated prices, which had been prohibited in the United States since the first authorization of Medicare prescription drug coverage under President George W. Bush.


Two main arguments against drug price negotiation are that it will harm innovation and it is unconstitutional. As a result of the I.R.A., the Congressional Budget Office estimated that there would be 13 fewer products brought to the pharmaceutical market over the next three decades, out of 1,300 total new drugs expected. While this is a very small percentage, it is also worth noting that it is possible some of these drugs would have been life-saving treatments. In the coming years, society must ask itself, what sacrifices in terms of drug availability, which is whether a treatment exists or not, are we willing to make in order to increase accessibility, which measures how easily such a treatment can actually be obtained. Since drug development is such a risky business, lowering prices through government negotiation may deter some investors from the pharmaceutical industry. Meanwhile, the pharmaceutical industry has filed multiple lawsuits to block the government from carrying out the I.R.A., and is expected to continue attacking this program. In particular, companies have argued that drug price negotiation is unconstitutional because it is a violation of their freedom of speech, seizes private property without just compensation, and imposes excessive fines.


On the other hand, however, the I.R.A. is projected to have immense financial benefit for both taxpayers and patients. According to estimates by the Congressional Budget Office, government price negotiation under the I.R.A. will result in $98.5 billion in reduced spending on drugs covered by Medicare over the next decade, a saving that will have a positive impact on the general public. Moreover, in 2022 $3.4 billion was paid out of pocket by more than nine million Medicare enrollees for the 10 drugs selected by President Biden for negotiation. It is expected that government price negotiation will significantly lower this cost, especially for the most highly priced drugs on the list. The I.R.A. is overall popular among the public, with 81% of Americans favoring drug price negotiations in Medicare according to KFF polling (“4 Arguments You Will Hear Against Drug Price Negotiation”).


B. Cap on Insulin Out-of-Pocket Costs

On top of drug price negotiation, the I.R.A. also included other provisions intended to assist Medicare beneficiaries by lowering the cost of medications. In particular, starting in 2023, the I.R.A. capped the out-of-pocket cost of insulin for Medicare Plan D enrollees at $35 per monthly prescription.


According to the American Diabetes Association, about 38 million Americans (10% of the population) have diabetes, a chronic condition that occurs when blood sugar is too high and for which insulin is commonly prescribed (“Statistics About Diabetes”). Furthermore, diabetes disproportionately impacts people of color, with 13.6% of Native American adults, 12.1% of African American adults, 11.7% of Hispanic adults, and 9.1% of Asian American adults having been diagnosed compared to 6.9% of white adults. This resulted in more than $400 billion spent on treatments in the United States alone in 2022. However, insulin costs are still rapidly rising. From 2002 to 2013, the prices for the most popular insulin products tripled, and from 2012 to 2016, the average price paid for insulin by patients with type 1 diabetes nearly doubled. As a result, many patients who are unable to afford their medication will resort to rationing their use, which involves taking lower doses than prescribed in order to save resources. A study published in the Annals of Internal Medicine by researchers at Harvard Medical School, the City University of New York’s Hunter College and Public Citizen found that 1.3 million Americans rationed insulin due to the high costs in 2021. Insulin rationing was more commonly reported by those without health insurance coverage and individuals under the age of 65 not eligible for Medicare. Black insulin users were more likely to report rationing insulin at 23.2% of insulin users.


There essentially exists a monopoly on insulin manufacturing as only three companies (Novo Nordisk, Sanofi, and Eli Lilly and Company) distribute insulin to U.S. patients. In fact, they are known as the “Big Three” because, combined, they have control over 90% of the global insulin market. Part of the reason for this market exclusivity is due to patent protection. Although most patents on insulin products have expired or are about to expire, these three companies still hold patents on the pens and other devices that are used to deliver insulin doses. However, because each device can only be used with one specific brand of insulin, generic competition is effectively delayed.


The cap on insulin out-of-pocket costs enacted by the I.R.A. will affect around three million patients with diabetes and has lowered the cost of insulin by 70%. Moreover, its impact turned out to reach not just Medicare Plan D enrollees. The I.R.A. required pharmaceutical companies to pay a rebate to the U.S. government if drug prices rise faster than inflation, which pressured manufacturers to similarly lower the cost of insulin for patients not on Medicare to $35 per month. In a statement by Senator Mark Warner from Virginia applauding this move: “When we capped insulin at $35 a month for Medicare patients as part of the Inflation Reduction Act, we put pressure on big pharmaceutical companies to do the same, and we are seeing the impact.”


President Biden’s “March-In” Framework

The second development that will be analyzed in this paper is the Biden Administration’s new “march-in” framework. In December 2023, the Biden Administration declared a new strategy to combat high prescription drug prices. This new strategy poses the question of whether the extent of a company’s market exclusivity on pharmaceutical products should depend on how high it sets its prices. Specifically, the focus of this new strategy is on drugs that relied on taxpayer funded innovation to develop. This so-called “march-in” framework will encourage government agencies to “license the patents of high-priced drugs to other companies and sell them at lower prices.” However, it is important to note that this is only recommended for government-funded drugs, or drugs that relied in some part on taxpayer funds to develop. As stated by the Administration, “taxpayers have spent hundreds of billions of dollars on research catalyzing the discovery and development of new prescription drugs. The Biden Administration believes taxpayer-funded drugs and other taxpayer-funded inventions should be available and affordable to the public” (“Fact Sheet: Biden-Harris Administration Announces New Actions”). Historically, the US government has declined to “march-in” in cases where the cost of a drug was too high, and this is the first time in history that the executive branch has claimed they will use this power. Although the Biden administration has not announced any specific patents it will “march-in” on, knowing that the government is willing to use this power may cause some companies to change their prices. Despite this, drug manufacturers of products that are marched-in-on have the right to and very likely would sue the government for patent infringement, and it is likely that a lengthy legal battle will ensue in these cases.


The Federal Trade Commission (FTC) praised the Biden Administration’s proposal and declared that “[e]ven when march-in rights are not actually exercised, the fact that the government has such rights in an invention can be a powerful leverage” (“Revisiting Government March-In Rights”). An article released by the White House on these new developments stated that “health care should be a right, not a privilege,” and the march-in framework is an attempt to move toward that ideal in the United States. Moreover, in a letter by Senator Elizabeth Warren and 70 other lawmakers, the framework was praised as one of the Biden Administration’s “most important authorities to prevent price gouging and provide taxpayer accountability.”


However, many opponents of this framework have also spoken up in the months since its release, and over 500 comments were filed by the February 6 deadline for groups and individuals to weigh in. The Association of Accessible Medicines and its Biosimilars Council (AAM), for example, surprisingly condemned the new proposed framework, fearing destabilization and negative impacts on generic competitors. The potential for litigation when a manufacturer’s product is marched-in-on may dissuade other companies from stepping forward to manufacture it. As the AAM stated, “march-in will also introduce substantial unpredictability into the development process for generics and biosimilars. For biosimilars, prospective manufacturers must invest as much as $300 million over 6-9 years just to develop the biosimilar - which may fail clinical trials - and then invest as much as “$10 million per suit” in patent litigation.” March-in may now introduce the uncertainty that a rival could simply file a march-in petition claiming that they could make the product even cheaper. The AAM also expressed a concern that the government might decide to license “the subject invention to itself, opening the door to government-led manufacturing.” Many of these opponents also fear that this new framework could undermine the United States’ position as a global leader in medical innovation. The American Cancer Society Cancer Action Network stated, “while we share the administration’s goal of lowering drug costs, we remain concerned about the utilization of march-in authority as an avenue to lower prescription drug costs as well as its long-term potential to deter the private and public research ecosystem that has been key to our nation’s progress in the fight against cancer.”


Ethical Analysis

A. Key Stakeholders

To analyze the ethicality of various uses of the ability to protect intellectual property in the U.S. pharmaceutical industry, I will begin by presenting the main stakeholders that are involved in this scenario, which include patients, pharmaceutical companies, and the federal government.


One of the primary stakeholders in this situation is patients taking medication distributed by pharmaceutical companies. According to Georgetown University’s Health Policy Institute, 131 million people, or 66% of all adults in the United States use prescription drugs, and this number increases for elderly individuals and those with chronic conditions (“Prescription Drugs”). Moreover, the proportion of individuals using prescription drugs and filing prescriptions is dependent on demographic factors such as age, gender, race, ethnicity, and income. 


The next stakeholder it is essential to consider in this situation is that of the pharmaceutical industry. The pharmaceutical industry employed more than one million workers in 2022 directly and supported another 3.8 million additional jobs across the economy (“The Economic Impact of the U.S. Biopharmaceutical Industry”). The salary and livelihood of these individuals are heavily dependent on the creation, manufacturing, and distribution of pharmaceutical products. The responsibilities of this industry center around the discovery, development, and manufacturing of drugs and medications. Innovation is highly important in this industry, and they have the right to apply for and receive intellectual property protection on their products.


Finally, the federal government is a key stakeholder that can significantly influence the interactions between pharmaceutical companies and patients.The stakeholder of the government does not just include the executive, legislative, and judicial branches, but also federal health insurance programs such as Medicare and agencies such as the FDA, which has the role of reviewing the safety and efficacy of pharmaceutical products sold in U.S. markets; the FTC, which enforces consumer protection laws and investigates unfair methods of competition; and the USPTO, which grants patents. Moreover, it is worth noting that most of the healthcare expenditures by the federal government come from taxes paid by the general American public. Therefore, it is reasonable to infer that we are all, to an extent, stakeholders in this situation.


B. Justice

Next, I will present key bioethical principles and considerations that I used in my analysis, beginning with the principle of justice. According to the bioethical principle of justice, each patient should be treated fairly, equitably, and appropriately for their condition. Moreover, a category of justice known as distributive justice refers to the fair and equitable distribution of health resources, which is especially relevant when analyzing the pricing of pharmaceutical drugs. Appropriate distribution according to distributive justice can be measured by different principles, among which the most common are:


  1. Distribution of an equal share to each person

  2. Distribution to each person according to their need for the resource

  3. Distribution to each person according to their contribution to the process of creating the product

  4. Distribution to each person according to their merit or achievement

  5. Distribution to each person according to usual free-market exchanges


Balancing these principles can present a difficult challenge in many different ethical scenarios. Current medicine distribution in the United States allows for prices to be determined by the drug manufacturer themselves. However, due to high pricing and the control of certain markets by a small number of pharmaceutical companies in the current American society, marginalized groups may disproportionately face a lack of access to the medication they need. Today, 1 in 4 Americans cannot afford to take their medications as prescribed, according to a study conducted by KFF. Specifically, high drug prices disproportionately impact low-income, uninsured, and people of color. Among respondents in a survey of households earning less than $48,000 annually, 18% reported that someone in the household had skipped a pill as a way of saving money. According to West Health-Gallup, among higher earning households with incomes of $90,000-$180,000, 7% of respondents reported having skipped a pill in the past 12 months (“In U.S. an Estimated 18 Million”). People of color are also disproportionately impacted by chronic illnesses or health conditions such as diabetes, HIV/AIDs, hepatitis B and C, hypertension, cardiovascular diseases, obesity, and asthma, tracing back to unjust policies. Racial minorities are 1.5 to 2.0 times as likely to have a major chronic disease, according to the National Institute of Health, which causes a greater need among these populations for prescription medicine.


It is a commonly held belief in contemporary society that healthcare is a fundamental human right. To elaborate on what this entails, according to the World Health Organization (WHO), patients’ right to health includes four essential elements:


  1. Availability: according to the WHO, this refers to “the need for a sufficient quantity of functioning health facilities, goods and services for all” (“Human Rights”).

  2. Accessibility: there are four dimensions of accessibility that the WHO highlights. These are non-discrimination, physical accessibility, economic accessibility, and information accessibility. Barriers to accessibility can include physical, geographic, or financial challenges, which can be addressed through establishing clear norms and standards in law and policy.

  3. Acceptability: this element requires that healthcare is people-centered and can cater to the needs of different demographics. It also requires compliance with international standards of medical ethics in terms of patient confidentiality and informed consent. 

  4. Quality: this is straightforward, not only requiring that health services are safe, effective, timely, and efficient, but also extends healthcare to environmental factors such as access to safe drinking water and sanitation.


If access to healthcare is a human right, it may follow from the principle of justice that patients across the United States should have an equitable capability to afford all the medication that they are prescribed. Many believe that, because healthcare is a human right, the distribution of medical resources should be need-based rather than dependent on their ability to pay. Even further, hundreds of billions of taxpayer dollars have been spent in the United States on research catalyzing the discovery and development of new prescription drugs. As such, the principle of justice (particularly distribution to individuals according to their contribution to the process of creating the product) may dictate that the benefits of these discoveries should be, in turn, applied equitably to the public. However, it is also important to establish that this definition of the right to access does not correlate to the right to any treatment regardless of cost. The right to healthcare establishes a minimum standard of care to which individuals are entitled, however this minimum is not “equated with the maximum care available anywhere in the world” (De George 556).


On the other hand, however, it is worth noting that justice is also a key argument for the strengthening of intellectual property protection. This argument states that “[within] the economic system of free enterprise, those who spend time and/or money in developing a product or the expression of an idea deserve a chance to receive recompense if the result they achieve is useful and beneficial to others who are willing to pay for it” (De George 549). Drug research and development is one of the most resource-consuming and risky processes in the realm of scientific research, and often requires multiple attempts before a successful treatment is developed. Thus, “[it] would be unfair or unjust for others to take that result, market it as their own, and profit from it without having expended comparable time or money in development, before the original developer has a chance to recoup his investment and possibly make a profit” (De George 549-550). Recent developments such as the I.R.A. provisions for drug price negotiation or the march-in rights framework may complicate this, however. When these two sides of justice come into conflict, how do we balance one with the other? Should we prioritize the interests of the stakeholder of the patients or the pharmaceutical companies? Ultimately, we must examine on a case-by-case basis whether the financial return given to drug manufacturers is outweighed by the harm caused to patient health.


C. Value of Innovation

This leads to the next important consideration in this paper, which is the value of innovation. In the healthcare industry, innovation allows society to treat previously incurable diseases or make better use of scarce resources. Innovation in the healthcare industry can be a driver of economic growth and optimize patient outcomes. In the past few decades, we have witnessed unprecedented growth and several revolutionary milestones in modern medicine thanks to the pharmaceutical industry. This has drastically improved and changed human potential for curing or treating diseases that used to be considered fatal. For example, due to the introduction of effective antipsychotic drugs in the past 50 years, the patient population at mental hospitals across the country dropped by more than half over the course of 20 years, despite an increase in the overall American population size. In another noteworthy instance, due to the discovery of the polio vaccine, polio became entirely eliminated from the Americas and what was once one of the most dangerous diseases for children in the U.S. is no longer relevant in today’s society. Finally, another example that shows the immense positive impact of pharmaceutical innovation is the improvement in managing cardiovascular diseases. As Laubach describes, “In one of the most striking trend reversals [...], the cardiovascular-related death rate (age-adjusted) has declined from 343.7 per 100,000 in 1972 to 282.8 per 100,000 in 1977, a phenomenon that medical experts have ascribed, in part at least, to the increasingly effective use of antihypertensive therapy” (61). Even the recent COVID-19 pandemic illustrated just how valuable medical innovation can be, as the rapid discovery, approval, and rollout of a vaccine played a large role in alleviating the health emergency. These examples illustrate the magnitude of the impact on public health that just one breakthrough in the pharmaceutical industry can have.


The U.S. is a global leader of pharmaceutical innovation, responsible for the development of 43.7% of all new molecular entities in recent years (Keyhani 2010), and this creates significant benefits for American citizens compared to other patients worldwide. U.S. leadership in the global pharmaceutical industry has ensured that Americans receive access to most medications far sooner and more easily than citizens of other nations. According to a report by the Pharmaceutical and Research Manufacturers of America (PhRMA), 85% of all new medicines launched in 2012 were available in the United States, compared with only 40%, on average, in Europe (“Setting the Record Straight”). In life-or-death situations, this improvement in access to treatment could be vital. Many argue that the fast access Americans have to new medications is a result of the capitalist system which fosters and supports innovation as well as uses a competitive, market-based approach to determine prices.  Moreover, having a fundamentally capitalist system, the U.S. as a country places an especially high value on innovation and innovator’s rights, even enshrining them in the Constitution through the Intellectual Property Clause.


From a consequentialist lens, some may argue that there will be a slippery slope toward the devaluation of scientific innovation and an undermining of the capitalist system if the government steps too far in intervening in the pharmaceutical pricing and intellectual property protection systems. Pharmaceutical research and development is already a risky process (recall that 90% of drugs put through the development phase never make it to the market), and with the added uncertainty of government price negotiations through the I.R.A. or march-in being exercised on the patent, this may deter investors from funding the discovery of potentially breakthrough drugs. In a study published by neurologist Roy Dorsey in the Journal of the American Medical Association, it was concluded that the U.S. may be approaching a period of stagnation in medical research due to the lack of funding. As stated by Benjamin George, a co-author of this study, “[clearly] the pace of scientific discovery has outstripped the capacity of current financial and organizational models to support the opportunities afforded. This analysis underscores the need for the U.S. to find new sources to support biomedical and health services research if we wish to remain the world’s leader in medical innovation” (“U.S. Slipping as Global Leader”).


D. Responsibility of the Pharmaceutical Industry

In this section, we analyze the following question: does the pharmaceutical industry have a responsibility to ensure that patients can afford the medication that they are prescribed? This ties into the broader ethical question of whether one has a fundamental obligation to help others who are suffering to the extent that they can do so. Moreover, does this obligation extend to helping others even if doing so will result in a cost to oneself? We can consider the millions of Americans whose health is in danger from inability to afford their prescribed medications and ask whether any responsibility falls on pharmaceutical companies toward lowering costs to ensure their safety. As De George writes, “[if] one accepts the obligation of aid, then it is not difficult to argue that those in the best position to help have the greatest obligation to do so. Now join that with the fact that those in the health professions have special obligations with respect to health and health care. They have these special obligations because of the field they have freely chosen, because they are related to health care in a way others are not, because they have the expertise that others lack, and because they make their living or profit from health-related activities.”


On the other hand, opponents may point out that the ethical responsibility of the pharmaceutical industry does not need to be this extensive, as companies essentially hold property rights over their patented products and thus their autonomy must be respected. As stated in the natural rights theory regarding patent protection, “The idea of patents is not about the allocation of resources, it is rather about the adjective function of property; that is, individuals can use property law either to gain advantages for themselves or to shift burdens to others” (Illingworth 52). However, what distinguishes the pharmaceutical industry from other industries and raises a taboo against commercialization in the minds of the general public is that medicine is seen as a priceless good; after all, there is no price tag on a life. Some have even accused the pharmaceutical industry of taking advantage of the fact that patients need their products to live, so they have no choice but to pay. Claims that drugs save lives and thus cannot be treated like normal consumer goods form the basis for demands that drug manufacturers exercise restraint when setting prices for their products.


Regardless of the opinions to the above question, however, there is also the issue of the responsibility of the pharmaceutical industry to follow ethically appropriate uses of the intellectual property system. By using unjust practices to extend their period of patent protection and block generic competitors, companies can exacerbate existing barriers to accessibility and direct funds toward drug modification instead of investing in needed new research. If patents can be considered as part of a social contract between the government and innovators, then the patent-holder also has a responsibility to uphold the terms and intended purpose of the patent system.


E. Responsibility of the Government

The government has a responsibility to protect its citizens, but to what extent does this involve a responsibility to negotiate with drug manufacturers to increase the accessibility of prescription drugs for the public? On one hand, the government has a responsibility to protect its citizens’ health and prevent inequities in access to care. On the other hand, the government also has a responsibility to preserve the constitutional rights of innovators (with property commonly thought of as an inalienable right), and incentivize them to continue creating for the benefit of society as a whole.


Using all the considerations brought up previously in this paper, I reached the conclusion that the responsibility falls on the U.S. government to act as a third party in this situation and balance patient health with the interests of pharmaceutical companies. Doing so will result in a more just system of healthcare. The overriding goal is to increase the efficiency of pharmaceutical innovation while maintaining its quality in order to alleviate suffering and improve quality of life for all. There are certain actions the government can take to achieve this goal, as demonstrated through the I.R.A. and march-in framework. Although these solutions may not be perfect, they are a step in the right direction of increasing transparency on the processes through which market exclusivity is obtained and drug prices are set. Some sacrifices may be made regarding the pace of innovation in American society and overall availability of treatments, but these are worthy sacrifices to improve access to potentially life-saving compounds. After all, the benefits of availability are severely limited if accessibility to those products cannot be ensured.


Conclusion

The harm caused to patients unable to access needed prescription drugs is greater than the financial benefit that pharmaceutical companies reap by manipulating the patent protection system to maximize their period of exclusivity and profit from a given compound. Governments can protect the most vulnerable in society by intervening and negotiating drug prices with manufacturers in order to ensure more equitable access to pharmaceutical prices. The new march-in framework to combat high pricing and the Inflation Reduction Act set a precedent for government agencies to work directly with drug manufacturers toward the goal of creating a drug pricing system that balances the interests of both innovators and patients, while maintaining the integrity of the patent industry.


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