If you liked AbbVie’s long-running Humira monopoly, you’ll love the sequel.
The patents-and-price-hikes formula that made Humira the best-selling drug in the world appears to be working just as well for another AbbVie product. As it did with Humira, AbbVie has blanketed Imbruvica with an array of patents likely to insulate the cancer treatment from generic competition.
Imbruvica is one of the drugs AbbVie is counting on to soften the blow when Humira finally faces generic competition in the U.S. two years from now. Humira sales soared past $22 billion—nearly half AbbVie’s total revenue—during two decades of exclusivity. AbbVie and predecessor Abbott Labs hiked the price of Humira 27 times since 2003, raising the cost of a year’s supply 470% to more than $77,000.
Key to Humira’s success was what a judge once called the “patent thicket” surrounding the drug. Patents covering manufacturing processes and other ancillary matters extended Humira’s exclusivity period well beyond the 2016 expiration of the patent on the basic compound underlying the drug.
AbbVie is hard at work on a patent thicket for Imbruvica. The company has applied for 165 different patents related to the drug and has received 88 so far. In another similarity to Humira, less than half the patent applications cover the “active substance” of Imbruvica, according to a report by I-Mak, an organization that advocates for lower drug prices.
I-Mak points out that the patents will add nine years to Imbruvica’s exclusivity period, protecting it from generic competition for a total of 20 years. Patents typically expire in six to 12 years.
Patent extensions mean big money for AbbVie, which splits Imbruvica revenues with a unit of Johnson & Johnson. AbbVie’s share last year was $5.3 billion. At that level, another nine years of exclusivity would generate more than $47 billion in revenue for AbbVie.
But the haul could be significantly higher, thanks to the pricing power that comes with monopoly. A congressional investigation earlier this year found the price of Imbruvica has increased 82% since it was introduced in 2013 by Pharmacyclics, which AbbVie acquired in 2015. A year’s supply now costs nearly $182,000, according to the investigative report.
Imbruvica also has replicated Humira’s success in the courts. Would-be competitors have fared no better challenging Imbruvica patents than they did against Humira patents. AbbVie recently won a case alleging patent infringement by two companies aiming to offer generic versions of Imbruvica. In a significant victory for AbbVie, the judge refused to invalidate Imbruvica patents.
Drug industry analyst Ronny Gal of AB Bernstein called the ruling “the most underappreciated piece of company-specific news of the past two weeks,” noting that if “the verdict is upheld, AbbVie will not have a major (intellectual property) loss after Humira until 2030.”
AbbVie agreed, predicting in a Securities & Exchange Commission filing that the verdict ensures “no generic entry for any (Imbruvica competitor) is expected prior to March 30, 2032, assuming pediatric exclusivity is granted.”
The rulings suggest AbbVie has little to fear from future legal challenges to its patent strategy (even the judge who called Humira patents a “thicket” ruled in AbbVie’s favor).
What about Congress? The company became Exhibit A for price-gouging and patent abuse in hearings on Capitol Hill this spring. High drug prices have provoked bipartisan outrage, leading to the introduction of bills that would curb some industry practices.
Yet legislative action by a deeply divided Congress is far from a sure thing. Morningstar analyst Karen Andersen recently wrote, “We haven’t seen a proposal that we believe is moderate enough to pass the razor-thin Democrat majority in the Senate and also be ambitious enough to gain the support of more progressive Democrats in the House.”
If there’s anything Democrats and Republicans should be able to agree on, it’s the need to stop drug patent abuse. AbbVie’s tactics undermine the purpose of patent protection. Patents are supposed to reward innovation, not confer decades-long monopolies that allow companies to raise prices without improving their products.
AbbVie didn’t invent Humira or Imbruvica, both of which came to the company by acquisition. Its ancillary patents don’t reward the innovators who created the drugs. They do ensure that people who need Humira or Imbruvica will pay more than they should for decades. In doing so, they highlight weaknesses in a patent system badly in need of reform.