Intellectual Property
The biopharmaceutical industry has delivered more than 900 new medicines since 2000 for devastating illnesses such as cancer, heart disease, neurodegenerative conditions and rare diseases. With over 8,000 innovative medicines in development, America’s strong intellectual property (IP) protections help fuel groundbreaking treatment advances while balancing affordability.
Innovation. Competition. Lower Costs.
When you go to the pharmacy to pick up a prescription, you’re seeing our IP system at work. IP protections, including patents, incentivize complex biopharmaceutical research leading to new medicines for patients. This system encourages innovative biopharmaceutical companies to compete by developing new brand medicines, expanding the number of treatment options available to patients. The most promising innovative medicines often face significant brand-to-brand competition within two years, lowering costs for patients by up to 50% or more. Brand medicines then face competition with lower cost generics and biosimilars, giving patients the benefit of that innovation at a fraction of the cost, indefinitely.
As a result, under the American IP system, prescription medicines accounts for a small and stable 14% of overall health care spending, exactly the same share as it has been for the last decade, even as new innovative medicines have made their way to patients.
America’s IP system balances innovation and affordability, providing U.S. patients with more medicine choices than anywhere else in the world. Over the past three years, 77% of new medicines launched globally were launched in the United States first. America’s world-leading innovation ecosystem - supported by strong IP protections - helps attract top scientists and fosters industry collaboration with academics and research centers. A strong IP-driven R&D pipeline further helps ensure Americans can access the latest medicines without relying on other countries.
Benefits
woman looking at tube in lab
Nearly 90% of medicines are filled with generics and biosimilars.
Every generic and biosimilar medicine depends on an innovative brand medicine to first reach the market. Today, nearly 90% of prescriptions in the U.S. are filled with lower cost generics and biosimilars.
On average, brand-name small molecule drugs face generic competition after just 13-14 years on the market—significantly shorter than the basic 20-year patent term.
America’s average cost of prescriptions is 18% less than in other wealthy countries.
America’s innovation ecosystem fuels a thriving generic market, helping make Medicare and Medicaid prescription prices 18% lower on average than in other wealthy countries.
18%
Use of generics and biosimilars have saved a collective $3.4 trillion over the last 10 years alone.
Our IP system fuels a thriving generic and biosimilar marketplace. When medicines come off patent, landmark legal frameworks – including the Hatch-Waxman Act and the BPCIA – expedite the entry of generics and biosimilar competitors.
$3.4 Trillion
Our IP system:
- Ensures American patients have access to more treatment options than anywhere else in the world, with the average prescription for generic medicines costing just under $7.
- Provides access to low-cost generics can lead to price reductions of nearly 85%.
- Has helped save over $3.4 trillion for patients collectively over the last 10 years alone.
- Requires innovators to publicly share information about their inventions, enabling generic and biosimilar manufacturers to reference clinical trial data from innovators and rely on abbreviated FDA approval pathways.
When America leads in medicines, every American benefits.
Innovative treatments are transforming patient care and reducing long-term health care costs. Because of this ecosystem, American patients can get breakthrough medicines years ahead of the rest of the world. America’s leadership in biopharmaceutical innovation is the result of smart policy choices, including strong IP rights, public‑private partnerships and incentives that reward risk-taking.
Get the Facts
Critics often misrepresent our IP system, which effectively promotes innovation, competition and patient choice. Here are the IP facts:
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The “Patent Thicket” Talking Point Falls Apart Under Scrutiny
Critics of the U.S. IP system claim that drug companies obtain excessive amounts of patents to lock out lower cost generic competitors. But those claims fail to show a link between patent counts and the timing of generic entry. These misleading attacks threaten to undermine the very system that fuels American leadership in biopharmaceutical innovation while also paving the way for low-cost generic competition.
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Setting the record straight: 3 facts about drug patents
As critics once again target the intellectual property (IP) system, it is important to set the record straight.
Here’s what you need to know: America’s IP framework uniquely balances the important goals of fostering innovation and promoting competition to keep health care costs in check.
Dive deeper: IP protections, including patents, provide the certainty needed to invest in the lengthy, risky and costly process of developing new medicines, helping deliver new treatments while enabling lower cost generics and biosimilars to transform the health of Americans. Today, nearly 90% of prescriptions are filled with these low cost options in the United States which provided $467 billion in savings last year alone.
The results: The system delivers the treatments and cures patients depend on, while ensuring medicines account for a relatively small and stable share of overall health spending at just 14% the same as it has been for the past decade. Strong IP protections also support a competitive market where lower-cost generics are widely used, helping keep Medicare and Medicaid prescription costs 18% below those in peer countries.
Here are three facts to know about America’s intellectual property system.
Fact #1: Evidence shows no link between patent counts and the timing of generic entry, which has consistently been 12-14 years for decades.
It is not uncommon for a medicine to incorporate multiple patented inventions. As a U.S. patent can only claim a single invention, these inventions may include the:
-
- Molecule
- Formulation
- Dosage form
- Delivery mechanism
- Use of a medicine to treat a particular disease
- Manufacturing process
The U.S. Patent and Trademark’s Office will only grant a patent should it find the invention meets the statutory patentability requirements for novelty, usefulness and non-obviousness.
By the numbers: On average, drugs are protected by about four patents— far fewer than many complex products in other industries as new data shows. Comparably, a golf ball can be covered by more than 60 patents. A 2024 USPTO study also found no link between a drug's patent count and time to generic entry.
Fact #2: Ongoing R&D may yield new patents, but it does not extend the term of existing patents.
A new patent cannot extend an existing one. Every patent lasts 20 years from its filing date and must independently meet the USPTO’s standards for novelty, usefulness and non-obviousness. Patents that come following a medicine’s initial FDA-approval are not awarded for minor tweaks or to extend exclusivity—they protect meaningful innovations that improve medicines, expand their use to new patient populations, and help address additional diseases and conditions.
Patients rely on this post approval R&D to advance new treatment options with medicines prescribed for new uses twice as often as their initial approved use. Research shows if average exclusivity periods had been five years shorter over the past decade, patients would have 32 fewer of these post approval treatments, and an estimated one million lives would have been lost.
There’s more: Data pushing "evergreening" claims often rely on faulty methods to estimate periods of patent protection to project time to generic entry. An analysis examining this approach across 224 drugs found actual generic entry occurred seven years earlier than claimed.
Fact #3: No company has a monopoly on treating disease.
Patents don’t stifle competition—they make it possible. New medicines often face brand-to-brand competition within two years, which can lower the costs of medicines by 60% or more. Once generics enter the market, prices decline considerably, with most prescriptions filled with copays averaging less than $7.
Shortening exclusivity periods would not bring lower-cost alternatives to market faster; it would just weaken the incentives that make new medicines possible in the first place.
Patent protections give innovators the confidence to invest in the high costs and significant risks of drug development. At the same time, they lay the foundation for future competition by requiring public disclosure of scientific discoveries through the patents system, enabling generic and biosimilar entry once exclusivity ends.
Addressing true barriers to patient affordability: Three large insurer-PBM conglomerates control 80% of the prescription drug market – and they are buying pharmacies, doctors’ offices and other parts of the health care system. If policymakers want lower costs and faster competition, they should focus on insurer-PBM conglomerates—not the IP system that has delivered more than 900 new medicines since 2000 and a marketplace where generics and biosimilars fill nearly 90% of prescriptions.
Learn more at PhRMA.org/IP.
Andrew Powaleny
Thanks to America’s IP System, Medicine Costs Go Down Over Time
Thanks to IP and the competition it fosters, the cost of the world’s most innovative medicines declines over time, making it the only part of the health care system where prices go down. Today, 90% of all prescriptions in the U.S. are filled with generics with an average copay of just $6.95. That’s a cycle of innovation and competition that is a uniquely American success story.
Thanks to America’s IP System, Medicine Costs Go Down Over teaser
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Biopharmaceutical companies are at the forefront of medical innovation. Every treatment the industry develops, and every therapy brought forward, is the result of many years of research, risk and investment. While some critics continue to question the necessity of intellectual property (IP) and patents in this process, the data tells a very compelling story.
How Intellectual Property Drives U.S. Innovation and Biopharma’s Impact.png teaser
How Intellectual Property Drives U.S. Innovation and Biopharma’s Impact.png teaser
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Every Patent Stands Alone Debunking the Evergreening Myth
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America’s intellectual property system rewards research before and after FDA approval. New patents don’t extend old ones, and generic competition keeps arriving right on schedule.
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