Biologics and Biosimilars: Antitrust Challenges in Biomedical Technology

Josh Gindis

Biologics are a class of drugs derived from living organisms. [1] They are complex, large-molecule, and often cutting-edge, providing relief to patients with a wide range of conditions—from cancer to autoimmune diseases and much more—that conventional treatments have been ineffective against. As such, biologics require significantly higher investment and longer timeframes to develop. To reflect this, biologics are entitled to exceptional patent privileges—for example, twelve years of regulatory exclusivity as opposed to small-molecule drugs’ five years. [2] These legal privileges help ensure drug researchers and manufacturers are able to recoup the substantial costs incurred by developing biologics. 

At the same time, biologic manufacturers have developed a playbook of practices of contested legality that have allowed them to extend their monopolies beyond the period allotted to them by the awarded patent(s): for one, the abuse of patent thickets. This term refers to the use of numerous overlapping patents surrounding different aspects of one product, ranging from its production processes, means of delivery, and even minor elements of its design. [3] Another polemical practice is that of reverse-payment settlements, which are cases of biologic manufacturers paying off a biosimilar competitor to delay market entry, extending the period of exclusivity that is typically limited to 12 years by the Biologics Price Competition and Innovation Act (BPCIA). [4] This exerts an obstructive effect on competition, preventing biosimilars—drugs that strongly resemble pre-approved products (“reference medicines”)—from entering the market, ultimately costing the consumer money at best, and their well-being at worst. [5] These practices both seek to block the creation of biosimilars, which are lifesaving, relatively cheap-to-develop alternatives to pricey biologics, whose research and development market is predicted to swell to $700 billion by 2030. [6]

Despite the growing importance of biologics to modern healthcare, their development is often hindered by anticompetitive practices that test the limits of patent law. The strategic use of patent thickets and reverse-payment settlements by biologics manufacturers to delay biosimilar entry leverages the monopoly power of valid patents to stifle innovation. [7] In addition to impeding the innovation that patent law should foster, this may constitute an antitrust violation under Section 2 of the Sherman Act. This warrants a reevaluation of how courts assess “anticompetitive intent” in the biomedical industry to encourage innovation over rent-seeking among biologics manufacturers. 

Patent thickets, for example, form a dense web that can complicate the licensing of products and make it daunting for competitors to even consider challenging or entering into competition with them. The makers of the biologic Humira (adalimumab), AbbVie, filed 247 patent applications for the drug, securing 130 of these (Compare this to Humira’s 76 patents in Europe and 63 in Japan). [8] Many of these patents concerned slight variations to the original product that allowed AbbVie to eschew competition entirely. 89% of the patents forming this thicket were filed after Humira had entered the market; almost half were filed from 2014 onward, over a decade after Humira became commercially available. This strategy of “patent evergreening”, as it is known, has made Humira the second-most profitable drug of all time, raking in over $18 billion dollars a year, largely at the expense of taxpayer-funded Medicare. Many of Humira’s later patents did not protect critical design elements of the drug from infringement; instead, it erected barriers to the entry of biosimilar drugs to market. This strategy was successful: U.S. competition was delayed until 2023 despite Humira’s original patent expiring 7 years prior. Though the case of Humira is extreme, it is not uncommon, with patent thickets presenting a significant obstacle to fair competition throughout the biomedical industry.

In addition to thickets, reverse payment settlements present a significant threat to biomedical innovation. This refers to the practice of a biologic manufacturer paying off a biosimilar competitor to delay market entry. “Pay-for-delay” takes advantage of needlessly high regulatory hurdles and the heavy burden of patent compliance to ensure profit at the cost of innovation and competition. For example, a biosimilar of Neulasta (pegfilgrastim), a biologic manufactured by Amgen for the treatment of neutropenia, was developed by competitor Sandoz. [9] Following years of litigation in hopes of bringing the product to market, Neulasta instead offered Sandoz a payout to delay the commercial release of its biosimilar until 2025. This tactic allowed Amgen to maintain exclusive rights to the sale of pegfilgrastim beyond the 12-year exclusivity period guaranteed by the BPCIA, and therefore reduced competition more than the patent alone allowed.

The Sherman Antitrust Act of 1890 is a law that seeks to prevent the formation of unfair monopolies and protect free trade. It prohibits actions that “monopolize, or attempt to monopolize… any part of the trade or commerce”. [10] In the context of biologic medicines, Section 2 seems at odds with the practice of patent evergreening. By layering patents on often convolutedly minor design details in excessive numbers, manufacturers can circumvent the limits of the exclusivity period granted by the BPCIA and effectively extend their monopoly unduly. These thickets can deter biosimilar competitors by creating a legal minefield that is costly and time-consuming to navigate. The weaponization of the patent results in the opposite of the effect patent law sets out to achieve: the stifling of competition, and the formation of a monopoly. Therefore, manufacturers engaged in such anticompetitive behavior may be in violation of Section 2. 

Likewise, reverse payment settlements may be unlawful under a similar statute. The Federal Trade Commission Act prohibits “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce”. [11] The legality of reverse payment settlements, therefore, comes into question: compensating biosimilar manufacturers to reduce competition may well be an unfair practice if it comes at a cost to the consumer. There is precedent to consider such payment schemes as violating antitrust law. The case of FTC v. Actavis, Inc. examined a reverse payment settlement that the Federal Trade Commission (FTC) attempted to litigate for antitrust violations. [12] The case was dismissed by the Eleventh Circuit Court, but the Supreme Court reversed this decision and ruled that the FTC should have been permitted to pursue its case. Its decision stemmed from the standard set by the Hatch-Waxman Act, which allows biosimilars to benefit from the pre-approved status of biologics. Breyer’s Court, recognizing the act’s “pro-competitive thrust”, ruled that these settlements are permissible so long as they do not extend the exclusivity of a drug beyond the expiration of its patent or exert “significant adverse effects on competition.” In the case of highly profitable and protected biologics, which the court notes the vast majority of reverse payment settlements pertain to, these schemes are virtually always anti-competitive.

Conversely, the case of In re Humira (Adalimumab) Antitrust Litigation, which alleged AbbVie’s utilization of patent thickets as leverage to force competitors into settlements was in violation of the Sherman Antitrust Act, was dismissed on the grounds that AbbVie’s relatively high success rate in obtaining patents dispelled accusations of “sham litigation”; not because it was not anticompetitive. [13] Sham litigation is one of the standards for antitrust enforcement noted in FTC v. Actavis, Inc., though it is subsequently stipulated that “different courts have reached different conclusions about the application of the antitrust laws to Hatch-Waxman-related patent settlements,” and furthermore, that the entrance into a reverse settlement policy itself implies the patentee is unconfident in their ability to maintain their patent and therefore must settle to maintain “supracompetitive prices” which litigation may threaten. Though this doesn’t definitively lay the groundwork for antitrust litigation against biologics manufacturers, it shows judicial willingness to tackle this issue and to reconsider patent law precedent regarding novel anti-competitive behavior. Other cases, such as State of California v. Teva Pharmaceutical Industries, Ltd., successfully litigated antitrust violations in the case of a similar reverse payment scheme, resulting in a settlement with the state and injunctions against such future agreements. [14]

The deleterious consequences of anticompetitive behavior among biologics manufacturers are evidenced by the shortage of biosimilar development facing the future of medicine: of the 118 biologics set to lose exclusivity in the next decade, nine in ten have no biosimilars, nor are any in development. [15] This looming void underscores the consequences of sparse antitrust litigation letting manufacturers take advantage of patent thickets and reverse settlement schemes and the burden this places on patients and taxpayers alike. The Sherman Antitrust Act, alongside the Federal Trade Commission Act, offers a framework to curb these excesses. The Federal Government has taken thoughtful action regarding this issue: for example, the Affordable Prescriptions for Patients Act of 2023, which limits the number of patents some biologics qualify for, but much is yet to be done. [16] Though judicial application has been inconsistent, the Supreme Court ruling of FTC v. Actavis, Inc. has set the groundwork for further litigation against violators of protections for competition in the biomedical industry. Following this standard, courts must reconsider their approaches to anticompetitive intent to better distinguish the legitimate protections the law affords to patentees and monopolistic overreach. In doing so, they can realign the incentives of the patent law system to ensure the continued development of life-saving biologic drugs at fair costs. Absent such reform, the biomedical industry risks stagnating under the weight of its own monopolies, leaving patients to bear the cost of a system that prioritizes profit over progress.

[1] Cleveland Clinic, Biologics: Biologic Medicine, CLEVELAND CLINIC: MY CLEVELAND CLINIC, https://my.clevelandclinic.org/health/treatments/biologics-biologic-medicine (last visited Apr. 1, 2025).

[2] The Pew Charitable Trusts, Policy Proposal: Reducing the Exclusivity Period for Biological Products (Sept. 8, 2017), https://www.pewtrusts.org/en/projects/drug-spending-research-initiative.

[3] Stefan Wagner, Are Patent Thickets Smothering Innovation?, YALE SCH. OF MGMT.: INSIGHTS (Apr. 22, 2015), https://insights.som.yale.edu/insights/are-patent-thickets-smothering-innovation (last visited Apr. 1, 2025).

[4] Fed. Trade Comm’n, Pay-for-Delay: When Drug Companies Agree Not to Compete, https://www.ftc.gov/news-events/topics/competition-enforcement/pay-delay (last visited Apr. 1, 2025).

[5] Ass’n for Accessible Medicines, Abuse of the Patent System Is Keeping Drug Prices High for Patients, ACCESSIBLE MEDS, https://accessiblemeds.org/campaign/abuse-patent-system-keeping-drug-prices-high-patients/ (last visited Apr. 1, 2025).

[6] Precedence Research, Biologics Market, PRECEDENCE RSCH., https://www.precedenceresearch.com/biologics-market (last visited Apr. 1, 2025).

[7] Cong. Rsch. Serv., R46679, Biologics and Biosimilars: Background and Key Issues (2020), https://www.congress.gov/crs-product/R46679 (last visited Apr. 1, 2025).

[8] Initiative for Medicines, Access & Knowledge, Overpatented, Overpriced Special Edition: Humira (Sept. 2021), https://www.i-mak.org/wp-content/uploads/2021/09/i-mak.humira.report.3.final-REVISED-2021-09-22.pdf

[9] Christopher Yasiejko, Amgen, Sandoz Settle Clash Over Biosimilars of Blockbuster Drugs, BLOOMBERG L. (Apr. 30, 2024), https://news.bloomberglaw.com/ip-law/amgen-sandoz-settle-clash-over-biosimilars-of-blockbuster-drugs (last visited Apr. 1, 2025).

[10] 15 U.S.C. § 2

[11] 15 U.S.C. § 45

[12] FTC v. Actavis, Inc., 570 U.S. 136 (2013)

[13] In re Humira (Adalimumab) Antitrust Litig., 465 F. Supp. 3d 811

[14] State of California v. Teva Pharmaceutical Industries, Ltd. et al., No. 2:19-cv-03281 (E.D. Pa. 2019)

[15] IQVIA Inst., Assessing the Biosimilar Void in the U.S. (2025), https://www.iqvia.com/Insights/The-IQVIA-Institute/Reports-and-Publications/Reports/Assessing-the-Biosimilar-Void-in-the-US (last visited Apr. 1, 2025).

[16] Affordable Prescriptions for Patients Act of 2023 - S.150, 118th Cong. (2023) (enacted)