How Drug Makers Manipulate Patents to Keep Insulin Prices High

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The financial burden of high insulin costs that patients and insurers face is often blamed on the Food and Drug Administration’s (FDA) regulatory framework, but a new study suggests pharmaceutical companies have also been using patenting processes to unfairly maintain high costs. In the FDA’s master list of approved medications, devices, and other therapeutics, a document known as the Orange Book, patent ownership of each item governs which companies are allowed to manufacture and sell which therapies. The FDA deals with drug approval, but patents are granted by another agency entirely, the U.S. Patent and Trademark Office (USPTO).

Though there are rules governing which developments by pharmaceutical companies merit inclusion in the FDA’s Orange Book, experts have long said that the book remains full of improper patents that unfairly hamper market competition. Because patents in the Orange Book lock in a period of market exclusivity for the holder that’s stayed at least 30 months even in the face of legal challenges from smaller companies, filing additional patents on product lines can allow manufacturers to operate without competition—and thus sell at higher prices—for longer periods of time. While a patent remains in the Orange Book, the FDA cannot approve an equivalent generic.

A Nov. 16 study highlights how the ease of manipulating the Orange Book has caused pricing issues for one group of therapeutics: insulin products. The gaming of the patent process is rife in the insulin marketplace, says William Feldman, an associate physician at Brigham and Women’s Hospital, instructor at Harvard Medical School, and a lead author of the new study, published in PLOS Medicine. And even in the wake of a March 2023 commitment from manufacturers to cap out-of-pocket insulin costs at $35 a month, “you still have a system where there’s not enough competition, and prices are still too high for these drugs that have been around for a long time,” Feldman says.

Feldman and his colleagues analyzed all publicly available FDA and patent data on insulin products from 1986 to 2019. “We went through every single Orange Book from every single year, and picked out every single patent on every single insulin product,” says Feldman. In this time period, 56 brand-name insulin products were approved, many from some of the world’s largest pharma companies, including Eli Lilly and Novo Norodisk. They also looked at the patent history of other small-molecule drugs (a category to which insulin belonged until 2020, when it was more accurately recategorized as a biologic). While there was opportunistic patenting across the board, the median number of years of market protection for all of the small-molecule drugs was 14; insulin products, however, averaged 16 years.

“One thing we looked at is patents that were filed after FDA approval,” Feldman says. These delayed patents, which can be applied to either a drug or a delivery mechanism like an injector, are a sign of what experts call “patent thickets,” or groups of patents that overlap in complex ways that can make legal challenges more difficult. For drugs like insulin, which require delivery devices, these thickets are much easier to create, as nearly every element of a device can receive its own patent. Often, says Feldman, the patents that prevent potential competitors from offering insulin systems are “on parts of the pens that don’t mention insulin at all.”

In a civil case decided against Sanofi—one major manufacturer of insulin products—in 2021, the First Circuit court ruled that patents disconnected from the active ingredient of a therapeutic (like many of those filed for injector pens), should not be counted in the decision-making over what is included in the FDA’s Orange Book, and that manufacturers could be punished by regulators for attempting to have these smaller-scale patents approved by the USPTO.

Read More: Big Pharma’s Patent Abuses Are Fueling the Drug Pricing Crisis

The data from Feldman’s study suggest that such disincentives may be necessary in order to break up patent thickets. In two-thirds of the drug/device combination products offered by insulin manufacturers during the time period covered by the study, these types of patents—minute, device-specific, and not connected to the actual drug itself—were the last to expire, and extended legal protection from competition for a median of 5.2 years.

Much of this extended protection also came from the more than 100 patents that were filed by insulin manufacturers after a drug or delivery tool had already been approved by the FDA, a timeline that experts generally agree reflects creative grabs at exclusivity rather than critical idea protection. On their own, these post-approval patents extended exclusivity for a median of six years.

For patients who’ve long held out hope for cheaper alternatives to their life-saving medication, a six-year extension of exclusivity could easily represent hundreds of thousands of dollars—or, if that expense is unmanageable, the forced use of cheaper and less-effective insulin delivery systems, says Feldman.

Though there have been some legitimately valuable developments in injector pens, says Feldman, it’s important that regulators set new standards for which changes deserve the full legal protection of a patent. “I don’t think that our system should be rewarding tweaks on the drive mechanism of an injector pen in the way that we do—we should be rewarding new therapeutic innovation,” he says.

There are some signs that government officials are taking some steps towards restricting patent manipulation: On Nov. 7, the U.S. Federal Trade Commission (FTC) announced an intended appraisal of more than 100 patents for medications and devices listed in the FDA’s orange book. According to an agency press release, the list of patents that the FTC flagged as potentially improper include those for various inhalers, EpiPen injectors, and medicated eye drops. The FTC’s current list of patents under scrutiny doesn’t include insulin products, but the changes it causes could affect them. The agency has given drugmakers with products on the list 30 days to withdraw or amend their Orange Book patents before they’ll face potential legal challenges for any failures to meet current standards. It’s possible that could trigger pharma companies to evaluate their patents in other areas—including insulin—as well.