You can hardly think of a better example of everything that is wrong with the U.S. drug patent system than AbbVie’s monster blockbuster Humira. Undoubtedly, Humira was a transformative medicine. Prior to Humira, there was really no effective treatment for rheumatoid arthritis, Crohn’s disease, psoriasis, and a host of autoimmune diseases. And AbbVie more than deserved to profit from its innovation. But there is a big difference between protecting intellectual property and building a legal fortress designed to keep rivals at bay. In AbbVie’s case with Humira, the difference may have cost the U.S. healthcare system $19 billion.
The $19 billion estimate doesn’t come from some anti-pharma watchdog group. That figure comes from a Congressional investigation quoting AbbVie’s internal analysis that biosimilar competition for Humira would have saved U.S. health care coffers at least $19 billion between 2016 and 2023. And that should scare the living hell out of everyone in the pharma industry.
Humira’s Original Patent Expired in 2016. Competition Didn’t Arrive Until 2023.
Humira’s key U. S. composition- of-matter patent – the “parent” patent protecting adalimumab – expired back in December of 2016. AbbVie publicly announced that expiry date in its SEC filings. But U. S. biosimilar competition of any significance didn’t commence until 2023. How could that be?
AbbVie created what’s often called a “patent thicket”: layer after layer of additional patents on formulations, manufacturing methods, dosing, and other facets of the drug. The Congressional Research Service found that AbbVie submitted 247 patent applications and was granted 132 patents related to Humira. Other congressional inquiries, with somewhat different tallies, found over 250 patent applications. This wasn’t a handful of extra patents for major scientific achievements.
Instead, one peer-reviewed study looked at the core U.S. Humira patent family and determined that approximately 80% of the 73 patents analyzed were not patentably distinct from some other patent in their family. The researchers estimated that those 73 patents covered only about 14 patentably unique inventions. Once point fourteen.
The Patent Wall Worked
They could attack dozens of AbbVie patents through many years of costly litigation—or settle. Some chose the latter option. Their resulting deals allow Humira biosimilars to enter Europe starting in 2018. Most U. S. licenses would not start until 2023. AbbVie openly reported those agreements. The Congressional Research Service summarized the outcome simply: Whereas biosimilars arrived seven years late in the United States, they launched in Europe by 2023, the year after Humira’s main patent ended. Some secondary patents cover Humira for over a decade after that. AbbVie racked up enormous profits during those extra years without U. S. biosimilar competition. In 20 21, AbbVie reported total Humira revenue of $17.3 billion in the United States alone. In 20 22, Humira’s last full year before U.S. biosimilars can compete, AbbVie earned $21.2 billion worldwide from the drug. Even U.S. sales increased that year, partly due to favorable drug pricing. This is how much influence delaying competition can have.
So What Did This Cost Healthcare?
The strongest defensible number is:
At least $19 billion.
AbbVie itself had projected that biosimilar competition entering in early 2017 would lead to lower Humira revenues. Congressional investigators estimated that lower prices due to competition entering between 2016 and 2023 would have saved the U.S. healthcare system at least $19 billion. Independent analyses buttress that finding.
One team of researchers sought to estimate the effects of adalimumab biosimilars on Medicare spending if they had entered the market as planned rather than facing delays. Assuming lists prices similar to those paid in other countries and applying typical pharmacy benefit manager discounts and rebates, they calculate that Medicare spending from 2016 to 2019 would have been about $2.19 billion less than it was, if approved biosimilars had launched on time. Rather than the $12.11 billion in actually observed Medicare spending on adalimumab during those years, their model predicts $8.98 billion in spending before rebates, and $2.19 billion after rebates (i.e. lower spending by $2.19 billion). Keep in mind that’s just Medicare and just four years. So $19 billion is certainly in the ballpark.
Patients Paid Too
It gets somewhat abstract when we discuss “healthcare-system costs.” That money isn’t sucked into a black hole called “the healthcare ledger.” Someone actually pays those billions. Employers pay for them through health plans. Consumers pay for them through insurance premiums and cost sharing. Taxpayers pay for them through Medicare and Medicaid.
By 2021, Congress found that Humira’s annual list price in the U.S. had climbed to $77,586, nearly 470% higher than its launch price. And when biosimilars eventually entered the market, the issue was not resolved. In 2022 alone, Humira cost Medicare Part D and its beneficiaries $5.4 billion before rebates and other discounts, according to the Health and Human Services’ Office of Inspector General. The agency estimated that Humira’s annual list price in the U.S. was around $90,000. Protecting Humira had financial repercussions that reached far beyond AbbVie’s bottom line.
Was What AbbVie Did Illegal?
And this is where I think the argument gets muddy. To say that AbbVie was “gaming the patent system” does not imply that AbbVie was violating the law. See the litigation challenging the Humira patent strategy. Litigation that demonstrated exactly why this practice should be viewed as a policy problem. One federal judge, in a case addressing an antitrust challenge, concluded that AbbVie had merely exploited benefits conferred through legal means and that nothing in current antitrust doctrine prevented such conduct just because it prolonged expensive Humira pricing.
That’s an important distinction. AbbVie’s fiduciary duty was to shareholders. U.S. patent law allowed AbbVie to file endless secondary patents, litigate those patents, and negotiate settlements that cemented future biosimilar launch dates. So long as management could make billions by pursuing this strategy, they had every incentive to do it. Perhaps the bigger failure was the system which allowed it.
Innovation Needs Patents. It Doesn’t Need Perpetual Exclusivity.
The knee-jerk reaction from the pharmaceutical industry to any criticism of patents is that patents promote innovation and that weakening IP protection will harm drug discovery. That is a fair point. Drug development is risky. It is also outrageously expensive. Most drug candidates will never make it to patients. Pharmaceutical companies must have the chance to recoup R&D costs and realize sufficient returns on their investment to make future drug discovery possible. But standing up for pharma innovation shouldn’t mean standing up for every drug patent.
There is a huge difference between shielding a truly innovative medicine and creating dozens of interlocking protections that make it financially impractical to challenge a generic entry against a mature blockbuster. If a peer-reviewed study shows that approximately 80% of patents in a sample Humira core patent portfolio were found to be non-PTD (patentably distinct) from another patent in the same family, we should question whether our patent system is incentivizing innovation or just grinding.
AbbVie Didn’t Break the System. It Showed Us How Broken It Is.
Uncomfortable conclusion: AbbVie didn’t create America’s broken pharma patent system. It exploited it.
And it worked: financially speaking. Humira is one of the most commercially successful drugs of all time. As recently as 2022, twenty years after it was first approved in the U.S., Humira was still generating over $21 billion dollars annually for AbbVie worldwide.
But by the time American patients finally had access to cheaper biosimilar versions of Humira, the original U.S. composition-of-matter patent had expired years ago and Europeans had already enjoyed biosimilar access to Humira for years. The price of that delay?
To the American healthcare system: at least $19 billion. And that’s what should matter to even the biggest pharmaceutical industry defenders reading the Humira story. Patent protection is supposed to represent a bargain between society and innovators: You come up with something of value, you disclose that invention to the world, you get a period of exclusivity on that invention and then you allow competition. When companies are allowed to commercially milk blockbuster drugs for decades after their primary patents expire by building enormous portfolios of ever-greening, overlapping secondary patents, that bargain starts to decay.
Pharma should lobby hard to protect patent protection for real innovation, not for every loophole that lets them squeeze additional decades of monopoly profit from their drugs. Because every time pharmaceutical companies defend patent tactics like AbbVie’s Humira patent thicket as “protecting innovation,” they do real innovation a disservice by making patients, employers, policymakers, and taxpayers that much less likely to believe pharmaceutical patents should be protected at all. Humira generated tens of billions of dollars for AbbVie long after the drug’s main patent protection expired in America.
But for all the success AbbVie’s legal team achieved in delaying competition, taxpayers spent at least $19 billion more thanks to those delays. Sure, AbbVie’s lawyers did their jobs. But who lost theirs? Ours did.
