Key Takeaways

  • Pharmaceutical patents grant innovators exclusive rights for 20 years, protecting new drugs while enabling companies to recover R&D costs.
  • Patent terms often outlast the development cycle, leaving an effective exclusivity period of 7–10 years.
  • Government policies, like “march-in rights” under the Bayh-Dole Act, are being reconsidered to balance innovation and affordability.
  • “Evergreening” strategies extend patent life but have sparked debates about access and affordability.
  • Reform efforts aim to prevent patent abuse while safeguarding true innovation that benefits public health.

Why Are Drug Patents Important

If you want to find out why drug patents are important, you’ll first need to understand what a patent is. Particularly, a patent is a type of intellectual property right that provides protection over an invention. Therefore, if you, as an inventor have a patent, no one else can create, use, manufacture, or sell your invention without your prior approval.

Drug patents are particularly important as new and improved drugs are being introduced to the market every year. The pharmaceutical sector has advanced over the years, which has led to the introduction of several drugs that have saved the lives of millions. These drugs have also generated a significant amount of revenue for their commercial benefits.

The Pharmaceutical Industry

The pharmaceutical sector is an area in which innovation impacts the bottom line of those drug manufacturers, as such companies focus more on the research and development stages of various drugs to determine which ones will survive and thrive if being released into the market.

Innovation in the drug industry is important for many reasons:

• It is a key element that defines the success of a drug manufacturer.

• While it can increase the risk involved when developing drugs, the benefits drastically outweigh the risk, as innovation allows pharmaceutical companies to distinguish themselves.

• Innovation provides high returns on investment. While developing and launching a new drug involves incredibly high costs, the rate of return on successful drugs can be much higher than the costs associated with introducing the drug to the market.

• Innovation allows for even higher profitability and better profit margins once the government approves of the drug.

• Innovation is important for these companies because more and more money is spent on marketing and research of potential drugs. If these drugs don’t make it to market, then time and money are spent. Therefore, innovative approaches must be taken to determine how such pharma companies can make a return on their investment without losing too much money.

• The cost of bringing a new drug to market is approximately $5 billion and can take near 15 years to get a drug introduced to the market.

• While the cost of bringing a new drug to market can be so high, drug companies are trying to increase profits by marketing current drugs to enhance the success of those drugs that they are currently manufacturing, and are on the market.

The Role of Patents in Drug Development and Market Exclusivity

Pharmaceutical patents play a pivotal role in shaping how new drugs move from discovery to market. A patent term typically lasts 20 years from the date of filing, but due to lengthy preclinical and clinical testing, the effective market exclusivity—the period when a drug actually earns revenue—often lasts only 7 to 10 years. This shorter window creates a strong incentive for companies to maximize profits quickly through strategic pricing and lifecycle management practices.

To counteract these limitations, drug makers frequently rely on regulatory exclusivities—independent protections granted by the FDA for meeting specific criteria, such as pediatric studies or orphan drug designations. These regulatory shields operate alongside patents and can further extend the period of market control, often delaying generic competition.

The Benefits of Drug Patents

• Patents contribute to roughly 80% of the overall revenue of pharmaceutical companies.

• Obtaining patent protection is important to safeguard the innovative approaches used by pharma companies.

• Drug patents help recoup investments that are incurred during the research and development stage.

• Drug patents can secure against infringement cases, as competitors can easily duplicate the manufacturing of a drug.

• Drug patents help raise venture capital, which thus improves the overall economic growth of companies operating in this industry.

Government Oversight and the Bayh-Dole “March-In” Debate

Pharmaceutical patents often intersect with public policy, especially when government-funded research contributes to new discoveries. Under the Bayh-Dole Act of 1980, the U.S. government retains “march-in rights,” allowing it to license patents arising from federally funded research to other companies in cases where the original patent holder fails to make the invention reasonably accessible to the public.

While these rights have rarely been exercised, recent policy discussions under the Biden Administration have renewed attention on using them to address high drug prices. The draft framework issued in late 2023 recommends that agencies consider price and accessibility when determining whether to invoke march-in rights—signaling a possible shift toward stronger governmental oversight of pharmaceutical patents in the interest of public access.

Requirements for Patent Protection

Not all drugs can be patented; more broadly, not all inventions are patentable. There are certain criterion that must be met in order to be able to apply for patent protection, and these include:

• The invention must be non-obvious

• The invention must be new

• The invention must be useful

An invention is non-obvious if when comparing the invention to other previously patented inventions, it doesn’t provide the same type of support or disclose the same type of information as in other inventions. This specific criterion is one of the most important items when considering patentability of an invention. It also helps to identify what type of competition would be out there for such an invention.

The invention must be new, and not already in existence. This includes any inventions that were previously patented, whether the invention is identical or very similar in nature. It is also important to keep in mind that if the invention is being used, you may run into a problem. If that invention is being used but has no patent protection, it still has common law protection. But, if you submit your patent application for the same invention, you may be successful in obtaining patent protection, as the other inventor should have patented his or her invention to obtain full protection rights over the invention.

Lastly, the invention must be useful, meaning that it must have a purpose. This is probably the most easily understand factor, as the invention must have a use, whether it be to assist in some sort of problem or benefit the user in some way.

Patent Abuse, Evergreening, and Reform Efforts

Although patents protect innovation, they can also be manipulated. Some companies engage in “evergreening,” the practice of filing multiple overlapping patents—sometimes referred to as patent thickets—to delay generic entry far beyond the original exclusivity period. For example, certain biologic drugs are shielded by dozens of related patents, creating up to 40 years without competition.

This has raised concerns about pharmaceutical patent abuse, where legal protection intended for genuine innovation is instead used to stifle competition and keep prices high. Organizations like the Association for Accessible Medicines (AAM) have proposed reforms to strengthen patent review systems and weed out non-innovative patents, advocating a more balanced approach that preserves innovation while improving drug affordability and access.

Frequently Asked Questions

  1. How long do pharmaceutical patents last?
    Pharmaceutical patents generally last 20 years from the date of filing, but due to lengthy research and approval processes, effective market exclusivity typically lasts 7–10 years.
  2. What are “march-in rights”?
    Under the Bayh-Dole Act, the government may license patents developed with federal funds to other companies if the patent owner fails to make the product reasonably available to the public.
  3. What is “evergreening” in pharmaceutical patents?
    Evergreening refers to filing additional or minor patents to extend exclusivity and delay generics, often criticized for limiting affordable drug access.
  4. Why are pharmaceutical patents controversial?
    While they encourage innovation, critics argue that some companies exploit the system to maintain monopolies and inflate drug prices.
  5. How do patents affect drug prices?
    Patents grant temporary market exclusivity, allowing companies to recover R&D costs but often leading to high launch prices until generics enter the market.

If you need help learning more about drug patents, or if you need assistance applying for a drug patent, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.