An Orange Book Landscape: Drugs, Patents, and
Generic Competition

Jonathan J. Darrow* & Daniel T.C. Mai*

ABSTRACT

Patents are widely considered to be a critical incentive for drug development because they allow manufacturers to recoup investments in research and development activities. However, patents are also criticized for preventing competition and contributing to higher prices. To better understand the patent landscape for approved drug products and the relationship between patents, other exclusivities, and generic competition, we examined all prescription drug products listed in the Orange Book as of February 2021. Surprisingly, only 31% to 39% of drug products had any remaining patent protection as of this date, meaning the majority of approved drug products are unencumbered by patents. This finding remained true even when regulatory exclusivities were considered. We also found that generic drug approval occurred despite the presence of patent protection in 28% of cases, and that patent expiration was not followed by generic drug approval in 32% of cases. These findings suggest that even valid patents do not necessarily block competition, as is commonly believed, and that dramatic price decreases often cannot be expected when patents expire. As scholars and policymakers craft policies aimed at controlling drug prices, they should seek to better understand how factors other than patents and regulatory exclusivities affect generic competition and patient health.

Read More (Open Access)
Subscribe