The Loophole Drug Makers Use to Keep Prices High

by Stephan Kinsella on May 26, 2026

See Lawrence Wilson and Sylvia Xu, “The Loophole Drug Makers Use to Keep Prices High: How pharmaceutical companies use the patent system to delay generic drugs from coming to market,” Epoch Times – In Depth – Premium Reports (May 24, 2026). Decent article. Of course, it hypocritically whines about patent law “abuse” while using the equally evil¹ copyright law and paywalls to block people from reading this information, so I post only a snippet and a Grok summary below.²

The article is wrong to refer to this as a “loophole.” This is just sleazy clickbait since the word does not even appear in the article. Using patent law as it is written is not a loophole nor is it “abuse.” The thing, the thing, the thing itself is the abuse! (h/t Burke) No; this is just the normal response of market actors to a patent system. If you give free food to people (“you on da the welfare,” as Eddie Murphy would say), they will take it, like hogs to a trough. If you give market actors the ability to use state force to hobble competitors by acquiring patents, they’ll do it. Welfare recipient are not the problem; patent applicants are not the the problem. The problem is the state stealing from taxpayers and granting patents! —and the confused citizens and intellectuals who support this robbery (Yes, Dorothy, patents are theft; (( Intellectual Property Rights as Negative Servitudes. )) I would say, “h/t Proudhon” but but while he said property is theft³ it is not clear that he opposed IP, any more than other stupid socialists oppose IP.)⁴ So the subtitle is correct: “How pharmaceutical companies use the patent system to delay generic drugs from coming to market.” Why wouldn’t they? What do you expect? It’s not a loophole. SOYLENT GREEN IS PEOPLE!

As I told a friend who sent me the link, this article is exaggerated, and this is not a loophole. It’s just the way patent law works; patent law and the Hatch-Waxman act allows patent terms to be extended due to regulatory delays,⁵ and it allows companies to acquire lots of patents. So they can use these patents as a weapon against competitors so that they can charge monopoly prices; they can develop what is called “thickets.”

Ummm I hate to break it to people but … that’s the whole purpose of patent law: to stop “unbridled competition” and to let manufacturers squelch competition so that they can charge higher prices—so that (so the stupid argument goes) they can profitably expend the R&D needed to create new drugs. None of this is surprising.

As I noted in my post IP Rights as Monopolistic Grants to Overcome the Public Goods Problem, IP proponents support these monopoly privileges on explicitly anticompetitive grounds. Take this explicit opening passage in an article by an ardent IP advocate, Jerome H. Reichman, a law professor at Duke:

Governments adopt intellectual property laws in the belief that a privileged, monopolistic domain operating on the margins of the free-market economy promotes long-term cultural and technological progress better than a regime of unbridled competition.

… Intellectual property laws typically provide qualified creators with temporary grants of exclusive property rights that derogate from the norms of free competition in order to overcome the “public goods” problem inherent in the commercial exploitation of intangible creations.⁶

***

In-Depth

Premium Reports

The Loophole Drug Makers Use to Keep Prices High

By Lawrence Wilson, Sylvia Xu

May 24, 2026Updated:May 24, 2026

Bob Parant left his home on Long Island for the first time when he enrolled in college. Always interested in sports, he decided to try out for the football team in his sophomore year.

One day, Parant got a message to report to the athletic office.

“The coach calls me in and says, ‘You’ve got diabetes mellitus,’” Parant said. “That was back in 1972, and that’s where it started.”

Parant, now 73, has been living with diabetes for over 50 years.

He’s generally upbeat about his condition, despite the unending regimen of blood testing and insulin injections. None of that stopped him from having a successful career in pharmaceutical sales.

Yet one thing troubles Parant about needing this drug to stay alive. It’s the way drug makers seemingly game the system to keep prices high.

“They have a patent for a certain period of time, so they’re protected,” Parant said.

A drug patent generally lasts for 20 years, though the period of exclusivity—during which only the patent holder can produce the drug—varies by drug type.

That enables the creator to control prices and recoup the cost of development. After that, anyone can make and market the item.

But opening the market to competition can be delayed by new patents, which can be created at any time for a particular drug, and can cover a variety of things.

“[Drug manufacturers] come out with another formulation of the drug, which gives them another number of years. And they just keep going, and generics and biosimilars cannot come into the market,” Parant said.

That tactic is known as a patent thicket.

The problem has been around since at least 2001, when Carl Shapiro of the University of California–Berkeley described it this way: “A patent thicket [is] a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.”

Grok summary

Summary: “The Loophole Drug Makers Use to Keep Prices High” (The Epoch Times, May 24, 2026)

The article examines how pharmaceutical companies use patent thickets—dense webs of overlapping patents—to extend market exclusivity for brand-name drugs, delay generic and biosimilar competition, and maintain high prices.

How Patent Thickets Work

A primary patent covers the active ingredient (typically 20 years).
Companies file additional patents for minor variations: new coatings, dosages, delivery methods, formulations, or new uses.
These are linked via terminal disclaimers, creating a thicket.
When generics try to enter, the brand company can file multiple separate infringement lawsuits, making legal challenges extremely costly and time-consuming for smaller competitors.

Examples Cited

Insulin: Eli Lilly’s Humalog gained 17 extra years, Novo Nordisk’s Novolog 27 years, and Sanofi’s Lantus 28 years of protection through overlapping patents. One generic attempt for Lantus was withdrawn after extensive litigation. Prices stayed high (e.g., $541/month wholesale in 2019) until Medicare negotiations lowered them.
Ozempic: First patent 2006, approved 2017, protected by overlapping patents until 2037. Taxpayers spent over $2 billion via Medicaid in 2023 (> $1,000 per claim), while insured patients may pay as little as $25 copay.
Trikafta (cystic fibrosis): 35 patents, some running to 2038. Annual cost > $370,000 (vs. independent estimate of $67k–$85k as reasonable). Earliest patents expire soon, but thicket delays generics.
Keytruda (cancer): 66 U.S. patents; generated $163 billion in revenue since 2014.

Patient Impact

Stories highlight financial strain:

Bob Parant (diabetes, 50+ years) criticizes barriers despite supporting profits.
Kris Garcia (multiple bleeding disorders) saw his construction business collapse under rising insurance costs.
Don Kreis’ daughter’s Trikafta bill equals ~3× his salary.

Costs are ultimately borne by insurers, employers, and taxpayers even when patients pay low copays.

Proposed Solution: The ETHIC Act

Bipartisan bill (introduced 2025 by Rep. Jodey Arrington and Sens. Hawley, Welch, Klobuchar).
Would limit brand companies to asserting only one patent per patent group in infringement lawsuits.
Supported by patient advocates and many scholars; opposed by groups arguing multiple patents are needed for complex drugs and that the bill threatens innovation.

Counterarguments

Drug development costs $1–2 billion per new drug.
Companies (e.g., Merck on Keytruda) argue heavy R&D investment justifies returns and that thickets protect genuine innovations.
USPTO notes that raw patent counts don’t accurately reflect value.

The article frames patent thickets as a key driver of persistently high U.S. drug prices, with the ETHIC Act presented as a targeted reform to increase competition without eliminating patent protections.