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The Importance of Pharmaceutical Patent Benefits

Patents are important to pharmaceutical companies because they allow the company to recoup investments it made in research and development during the drug's lifecycle.

However, this can be at the expense of patients and consumers. Pharmaceutical patents can also lead to high prices and a lack of competition in the market place, which is one of the reasons that many Americans are looking for ways to reduce or control the cost of prescription drugs. Visit Percent Science to read more.


Pharmaceutical companies spend billions of dollars on research and development, so they must be able to recoup their costs through the sale of new drugs. Patent law provides companies a way to do that, and in return it awards them with a 20-year monopoly on the new drug.

But it can also create a triple whammy for consumers: expensive fixed costs (such as FDA approval), an incredibly long development process and the inability of lower-priced generic competitors to compete on price.

As a result, patented drugs make up about 63 percent of overall drug spending despite representing less than 10 percent of prescriptions filled.

A common tactic for holding on to their monopolies is called "evergreening," which allows a pharmaceutical company to obtain a second patent on the same drug by tweaking one aspect of it - a new formulation, for example, or a change in dosage. These are often trivial tweaks, and many patent attorneys argue that they don't represent real innovation. But they're still a lucrative way for brand-name companies to avoid competition from cheaper generics.


Once a patent expires, generic drug companies are allowed to manufacture and market a generic equivalent of the previously patented prescription drug. This leads to the reduction in the price of the medication and helps consumers save money.

In the pharmaceutical industry, a lot of research and development is done to develop new innovative drugs. These innovations are then rewarded with patent benefits, which allow a company to recoup their investment and make more profits.

Many drug companies use various legal techniques to extend the duration of their patents, which in turn can help them make more profit. Some of these methods are relatively straightforward, while others can be quite complex and legally risky.

A common method for prolonging a patent is by reformulating the drug - sometimes to create an extended-release version or to change how it’s administered. This can mean changing how a medicine is dissolved or by adding it to a nasal spray or dissolvable tablet.


Patents provide pharmaceutical companies with the incentive to invest in the research and development of new drugs. This is important because it helps recoup the high costs of bringing a new drug to market.

However, the incentives to innovate can also be abused by pharmaceutical companies. This is known as strategic patenting, which occurs when a company obtains multiple patents for its drug while delaying or extending its monopoly period.

These patents allow the company to delay generic or biosimilar competition for up to 39 years, allowing them to charge patients higher prices for their medicine. This practice can cause a great deal of harm to patients who rely on a particular drug.

To reduce the likelihood of this occurring, Congress should require pharmaceutical companies to prove that their follow-on inventions are actually better for patients than the original product (in other words, that the new invention makes a difference in social welfare). It could also enforce a utility requirement on the patents that requires the patentee to prove that its invention makes a difference in social welfare.

Patent Office

Pharmaceutical patent benefits are a critical incentive to encourage research and development of new prescription drugs that benefit people worldwide. Without the potential for profit that a granted patent provides, pharmaceutical companies wouldn’t have the incentive to develop new medicines and cures year after year.

In order to obtain a patent for a drug, the pharmaceutical company must meet certain requirements at the patent office. These requirements may include proving that the invention is unique, not obvious and capable of industrial application.

The pharmaceutical company must also prove that the invention is useful and has a good chance of success in the marketplace. This is often done by conducting pre-clinical and clinical trials.

However, this process is not foolproof. While the patented compound or formulation may be effective, a competitor can still make a cheaper version of the same drug and market it to patients. This is called “evergreening.”

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