How Patents Help Keep Obesity Drug Prices Sky-High

Research Corner
September 19, 2023

Soleil Shah, MD, MSc, Research Reporter

Soleil Shah writes Tradeoffs’ Research Corner, a weekly newsletter bringing you original analysis, interviews with leading researchers and more to help you stay on top of the latest health policy research.

This week’s Research Corner is all about the patents protecting popular weight loss drugs like Wegovy and Ozempic. If you’re looking for related content, tune into the podcast next Thursday to learn how employers and insurers are grappling with the cost of these drugs. 

And before we dive in, I’d like to recommend another health care newsletter, Healthcare Huddle, written by Jared Dashevsky, who’s a resident physician like me. Jared’s got a great knack for breaking down wonky but important trends emerging in the health care industry, from the evolving business models of pharmacy benefit managers to the growth of AI-powered medical scribe tools. It’s free to subscribe.

How Patents Help Keep Obesity Drug Prices Sky-High

Ads and articles about weight loss drugs like Wegovy and Ozempic seem to be everywhere you turn. And with good reason: They have the potential to help many of the more than 100 million adults in the U.S. who are considered obese lose up to a fifth of their body weight.

But that potential impact isn’t cheap. With a monthly cost ranging from about $600 to $1300 per month, these drugs have employers cutting off coverage and patients scouring the internet for cheaper, sometimes dangerous ways to get their hands on these treatments. 

Some of these medications have been on the market for years — initially used to treat Type 2 diabetes — yet their prices remain stubbornly high. One big reason, according to a recent JAMA study, is that a web of patent protections makes these drugs especially difficult for generic companies to copy and sell on the cheap.

Layers of patents prevent competition and keep prices high

Typically, after the Food and Drug Administration (FDA) approves a brand-name drug, its manufacturer enjoys around 14 years of exclusivity — a chance for the company to maximize its profits and recoup its investment costs before cheaper generic copycats arrive. 

In their new study, however, Rasha Alhiary, William Feldman and several colleagues estimate many of these drugs with the potential to treat obesity will be protected from generic competition for closer to 18 years.

The authors reached that estimate by examining publicly available patent data for the 10 products in this class, known as GLP-1 receptor agonists, approved by the FDA between 2005 and 2021. One finding stood out, Feldman told me. More than half the patents these drugmakers have listed with the FDA are not on a drug’s active ingredients, but rather on the devices used to deliver the drugs (most of which are injectables) — in other words, fancy needlespens and the like.

“By patenting the delivery devices along with the drugs, these companies can build up a whole extra layer of defense, fending off generic competition and keeping prices high for longer,” Feldman said.

Patents are an important tool for incentivizing investments by drugmakers. But the U.S. patent system has also proved vulnerable to abuse, with companies using every minor tweak to a product — a change to a pill’s coating or its dosing, for example — as a chance to put up another roadblock for generic manufacturers. The country’s top-selling treatments average a whopping 140 patent applications, according to I-MAK, a nonprofit group advocating for patent reforms.

The industry defends its aggressive patenting strategies by arguing that even seemingly minor product tweaks, such as a change to a needle, can deliver meaningful benefits to patients. “As drug delivery technologies improve, the drug can become more convenient or comfortable for patients, offering opportunities to improve adherence and avoid disease complications,” said Megan Van Etten, a deputy vice president at PhRMA, the leading industry trade group.

The strategy is not limited to weight loss drugs

When William Feldman sees the delivery device patents starting to pile up for GLP-1 drugs, he sees a focus on protecting profits. He points to similar strategies used by companies that make asthma inhalers — another type of drug delivered via a unique device. 

study he co-authored on inhaler manufacturers found that those companies made more than half of their profits on inhalers — over $100 billion — after the initial patents expired on the medicine’s active ingredients.

“You’ll see these device patents for inhalers on things like dose counters that hardly seem innovative, but end up extending these periods of patent protection and forcing generic firms to file lawsuits that take years to resolve,” Feldman said. “It just blows my mind sometimes.” 

Drugmakers appear to be increasingly embracing this strategy. One study found that the percentage of drugs with at least one device patent tripled between 2000 and 2016.

More regulation and competition for GLP-1 drugs may be on the horizon

The Federal Trade Commission seems to be catching onto these patent practices. Just last Thursday, the agency announced it “intends to scrutinize” whether brand-name drug companies are illegally using their device patents to block competition.

Another bright spot noted by Feldman and his colleagues is that the manufacturers of generics seem especially eager to slash their way through the patent thickets surrounding these GLP-1 drugs. During the study period, generic drugmakers had already filed 24 patent-challenging lawsuits. At least one generic manufacturer is now closer to entering the market.

While those legal cases wind their way through court, there’s also hope that other brand name competitors will enter the market soon and help bring prices down. And at least one GLP-1 drug, Ozempic, could become eligible for Medicare’s new price slashing negotiation process as soon as 2025.

In the meantime, however, these revolutionary drugs remain out of reach for most Americans.

 Three Other Studies You Might Have Missed…

  • Patients’ experiences in hospitals across the U.S. worsened during the COVID-19 pandemic, especially regarding their feelings about cleanliness of the hospital environment and staff responsiveness. (JAMA Health Forum)
  • Replacing all of Michigan’s lead-contaminated water service lines (the piping that carries water from public supplies to the plumbing fixtures inside private properties) could lead to an estimated $1.91 billion in net savings for the state and reduce lead exposure for 420,800 newborns. (Health Affairs)
  • Patients brought into Level 1 trauma centers in St. Louis for firearm injuries from 2010 to 2019 had a 7% risk of experiencing another firearm injury in the subsequent year and a 17% chance of experiencing another one in the next 8 years. (Annals of Internal Medicine)