A three-decade monopoly: How Amgen built a patent thicket around its top-selling drug

The biotech company has earned more than $70 billion from sales of Enbrel. Patents protecting it will keep copycat competition at bay until 2029.
Adeline Kon / Biopharma Dive

Three decades ago, a scientist at the University of Texas named Bruce Beutler asked the U.S. government to grant him a patent for a new invention.

Beutler, who would later win the Nobel Prize for his research, had come up with a way to shut down certain types of inflammation in cells. His discovery became the foundation of the arthritis drug Enbrel, among the highest-selling pharmaceutical products in history and the backbone of one of the industry’s largest companies, Amgen.

In 2029, an incredible 37 years after Beutler first sought his patent and 17 years after it expired, Enbrel could finally face lower-cost competition in the U.S. That longevity is due to Amgen’s efforts to build an interlocking wall of intellectual property protection that’s often referred to as a “patent thicket.”

The practice can stretch pharmaceutical company monopolies on their drugs far beyond the standard 20-year patent term. Increasingly, these patent thickets are cited by a diverse group of policymakers as contributors to high U.S. drug prices.

“It’s easier to keep the monopoly on an old one than it is to find a new blockbuster drug,” said Matthew Lane, executive director of the Coalition Against Patent Abuse. “The cost to pay patent attorneys to file applications is a drop in the bucket,” he added, compared to the cost of research and development.

Enbrel’s decades-long run is due to luck and high-stakes litigation as much as standard drug-patenting practices. But the patent thicket around Enbel isn’t as much of an outlier as it may seem. Instead, it’s an example of how vital intellectual property is to large drugmakers and how much money can be wrung from stretching patents beyond the spirit of the law.

Amgen didn’t make an executive available for an interview with BioPharma Dive. In a statement, the company said, “Biopharmaceutical research is an incremental process driven by the science, and ongoing innovation after product approval can lead to meaningful medical advances and improving the patient experience.”

“We believe that protecting intellectual property is critical to fully develop a medicine’s therapeutic potential for patients,” the company added.

Defending a blockbuster

Drugmakers often gauge the potential of their products by whether annual sales can eclipse $1 billion. Large pharmaceutical companies have a handful of these “blockbusters,” while successful biotechs might have one or two.

Drugs that earn many billions of dollars in sales each year turn companies like Amgen — once an upstart biotech called Applied Molecular Genetics — into industry titans.

Enbrel wasn’t Amgen’s first; two other blockbuster drugs, Epogen and Neupogen, grossed over $45 billion and $25 billion, respectively, before their patents lapsed in the U.S. But Enbrel could be Amgen’s longest-lasting and highest-earning product due to the dozens of patents that protect the drug from copycat rivals.

Cumulative sales have already topped $74 billion and, by 2029, could approach $100 billion — an incredible sum matched only by a few other pharmaceutical products in history.

The profits drugs like Enbrel generate help pharmaceutical companies grow and, as they often argue, can fund the development of new medicines. But drugmakers end up depending on them so heavily that they protect them with patents covering even the smallest differences in how their products work, are made and are administered.

Biologic drugs are more complex than chemical pills, too, allowing their makers to construct denser thickets that keep low-cost competitors at bay for longer, as was the case with Enbrel.

How Amgen built a 'patent thicket' around Enbrel

The table below illustrates the dozens of patents Amgen was able to use to stretch its monopoly on Enbrel beyond 30 years. Each bar reflects a patent and its period of effectiveness. The dark blue bars are the seven crucial patents that have preserved Amgen’s pricing power.

Source: Jeffrey Wu, National Chengchi University in Taiwan, for article "Into the Woods: A Biologic Patent Thicket Analysis " in the Chicago-Kent Journal of Intellectual Property. Key patents identified from Amgen annual reports filed with the Securities and Exchange Commission.

A new approach to autoimmune disease

Enbrel’s origin lies in a rush of research at universities and pharmaceutical laboratories in the 1980s and 1990s to improve on immunosuppressive drugs like methotrexate and leflunomide, which were helpful, albeit flawed treatments for conditions like rheumatoid arthritis.

“They had a lot of side effects and they weren’t really outstanding therapies,” Beutler said in an interview.

Beutler and other researchers had a different idea. By blocking a protein called tumor necrosis factor, or TNF, they could better control the inflammation and pain experienced by patients with autoimmune diseases.

Beutler’s team at University of Texas-Southwestern sought to develop a medicine that combined one TNF-blocking protein with another derived from human antibodies. That so-called fusion protein approach was different from much of the research from that era, which focused on making larger drugs known as monoclonal antibodies. (Humira and Remicade, two hugely successful medicines, are prominent examples of the type.)

Beutler’s invention was described in U.S. patent number 5,447,851, which his institution then licensed in 1995 to a Seattle-based biotech called Immunex. Three years later, the Food and Drug Administration approved the resulting drug, which was called etanercept and Immunex sold as Enbrel.

The approval, incidentally, put Immunex in a challenging position. Though Immunex already made one biologic drug, approved in 1991 and known as Leukine, it needed different manufacturing capabilities to mass-produce Enbrel. So Immunex scrambled to find a solution, according to Michael Kranda, the company’s chief operating officer from 1984 to 1996. The company first built an annex in the parking lot near Leukine’s production facility, and then outsourced production to a Boehringer Ingelheim factory in Germany.

But in the rush to get Enbrel to market, patenting manufacturing methods or how the drug was formulated was not a high priority for Immunex, as it would later become for Amgen.

“We were just in a position of asking, ‘Can somebody make this and hit our window to launch?’” said Kranda, now a senior vice president at gene therapy developer Asklepios BioPharmaceutical.

Immunex did make one crucial patent decision amid its manufacturing push, however. In 1999, it acquired rights from Roche to a method for making a TNF-blocking fusion protein. The Swiss drugmaker had sought a patent in 1990 but hadn’t yet been granted one. That turned out to be a lucky break, for it would eventually end up as the final defense against future rivals.

Amgen’s attorneys go to work

By 2001, Immunex, buoyed by hundreds of millions of dollars in Enbrel sales, was an acquisition target, and it fell to Amgen in one of the biggest biotech deals of the time.

Amgen immediately went to work protecting Enbrel. The company filed for one patent after another, building an intellectual property estate that grew to at least 68 granted patents, according to an analysis by the advocacy group Initiative for Medicines, Access and Knowledge, or I-MAK.

They have 12 years without competition. I think that should be enough.

Tahir Amin, I-MAK

Many of them claimed manufacturing processes and formulation — expanding on Immunex’s intellectual property defenses — as well as methods of use and administration devices. Together, they formed a thicket of legal protection that made it exceedingly difficult for would-be competitors to break Amgen’s monopoly, even decades after the drug’s first approval.

In its statement, Amgen argues the growth of Enbrel’s intellectual property estate reflects hundreds of millions of dollars worth of research that has led to “meaningful medical advances and [improvements in] the patient experience,” as well as manufacturing advances that have ensured steady supply.

In filings with the Securities and Exchange Commission, Amgen lists seven chief patents among those 68. Four of them, including Beutler’s original discovery, have expired, but three remain.

The most important is the intellectual property that Immunex licensed from Roche in 1999 and finally won patent protection for in 2012.

How that particular invention stretched Enbrel’s exclusivity is due to a quirk in international patent law. Because Roche applied before a World Trade Organization agreement on patent rights known as TRIPS went into effect, the patent received 17 years of protection from the date of publication. Had TRIPS rules, which brought the U.S. into conformity with the rest of the world, been applied to that application, the patent would have expired in 2010.

The result was a massive windfall for Amgen. But Tahir Amin, cofounder and co-executive director of I-MAK, noted that pharmaceutical industry lobbying helped shape TRIPS. “Is it luck or is it by design? Because in the end they were pushing for those changes,” he said.

The 22-year span between Roche’s first application and the eventual grant also reflects how U.S. patent law leans heavily in favor of granting monopolies to corporations, Amin said. Patent applications can be kept alive for many years by filing paperwork that adds to the original invention as well as requests for further review after a rejection. By comparison, a refusal can only be appealed twice in Europe.

“The U.S. is an outlier in that aspect,” Amin said. “You don’t ever have to give up a patent application.”

Competition ready, but not launched

As Amgen built a fortress around Enbrel, the U.S. government tried to encourage companies to develop lower-price alternatives to expensive biologic drugs like TNF inhibitors. In 2010, Congress passed the Biologics Price Competition and Innovation Act, or BPCIA. The law created an FDA approval pathway for so-called biosimilars, the copycat versions of biologic medicines.

But biosimilars haven't had their intended impact, in part because of patent thickets.

Enbrel, then earning Amgen more than $3 billion per year, was a top target for would-be biosimilar competitors. Novartis’ Sandoz division began developing an Enbrel copy in 2012 and four years later, won FDA approval for Erelzi, the third biosimilar to be cleared by the agency.

But five years later, Erelzi still hasn’t launched, even as 30 other biosimilars have won U.S. approval and 21 of them have reached market. Standing in the way of Erelzi, and Samsung Bioepis' subsequently approved Eticovo biosimilar, is Amgen’s patent thicket.

Enbrel's path to $74 billion in revenue

Amgen acquired Enbrel when it bought Immunex in 2002. Over nearly two decades it has earned more than $70 billion in cumulative revenue and could be on track to exceed $100 billion. (Figures in millions of dollars)

Amgen used the Roche invention as well as a second manufacturing patent to challenge Erelzi. In response, Sandoz claimed the intellectual property wasn’t different from earlier, expired patents.

A U.S. district court sided with Amgen in 2018, however, a ruling later affirmed by the Court of Appeals for the Federal Circuit. Novartis appealed to the Supreme Court, which declined to take the case, closing down the Swiss pharma’s legal options and ensuring Amgen’s patent defenses remained in place.

Without copycat competition, Amgen can better command pricing power in the U.S. through 2029. In 2017, Enbrel’s annual list price was about $53,000, according to a report prepared by staff of the U.S. House Oversight and Reform Committee.

Amgen says that, in spite of the price, it has spent $7 billion since 2008 on patient support programs to help ensure access to people who can't afford its drugs.

In Europe, meanwhile, biosimilars to Enbrel launched in 2016 and have won about 40% share of the market, helping drive the drug’s price down to as little as $9,200 in the Netherlands in 2017, according to the House committee report.

Amgen doesn’t market Enbrel in Europe, however. That task belongs to partner Pfizer, which booked $1.4 billion in 2020 sales, a number that had shrunk by nearly $300 million from 2019 because of “continued biosimilar competition,” the company said.

Enbrel’s continued U.S. exclusivity beyond 2016 — when key patents would have lapsed if not for Amgen’s efforts — could end up costing the U.S. tens of billions of dollars, I-MAK estimated.

The industry lobbying group BIO, of which Amgen is a member, takes a different view, arguing that patents aren’t as much of a barrier to biosimilar entry as they seem. The organization analyzed biosimilars that have launched in the U.S. and found on average, they reached patients less than a year after FDA approval. (Launches of Enbrel and Humira biosimilars, both expected many years after first approvals, could significantly change that finding, however.)

Moreover, BIO hasn’t found a correlation between the number of patents a company asserts in litigation and the length of time until a biosimilar comes to market, according to Melissa Brand, the organization’s director of intellectual property policy. Several have launched at risk of litigation, she added, suggesting the threat of lawsuits does not always deter biosimilar makers.

Ironically, among those launched at risk were two biosimilars from Amgen: Kanjinti and Mvasi, which respectively mimic Roche’s cancer drugs Herceptin and Avastin.

The government takes notice

As long as investors continue to reward companies for sustaining profit-making patent monopolies, drugmakers will likely continue to use legal means to do so. But they may find themselves challenged more frequently amid continued pressure from lawmakers.

The House Oversight committee’s report, for instance, is a sign that patent thickets and their effect on drug prices are gaining greater attention on Capitol Hill. At a hearing in May, Democratic and Republican lawmakers criticized AbbVie CEO Richard Gonzalez over the company’s patent estate protecting its top-selling drug Humira until 2023.

“You have the right to make your profit, give many billions to research and develop new pharmaceuticals," Rep. Clay Higgins, R-La., told Gonzalez at the hearing. “But it's a question of whether or not it's an honest profit.”

Legislation to limit patent thickets is in the works. Bills voted out of the Senate and House Judiciary Committees would limit the number and types of patents that makers of biologic drugs like Enbrel can assert in lawsuits against biosimilar developers, and would apply to products on the market as well as ones still in development.

Achieving a legislative victory would be a very tall order, given the problems multiple presidential administrations have had enacting any type of drug price reform. But more aggressive challenges could come too. The Biden administration has signalled that federal agencies might take a closer look at patent thickets. Both the FDA and U.S. Patent and Trademark Office have been directed to help speed development of biosimilars. And President Joe Biden was reportedly pressed to nominate a PTO director willing to challenge drug patents. (He picked Kathi Vidal of the law firm Winston & Strawn last week, but it’s unclear what tack she might take on issues related to pharmaceutical patenting practices.)

While these moves could help prevent the next Enbrel, they won’t bring an earlier end to Enbrel's exclusivity. That, for now, is fixed by the court judgments, an outcome not lost on industry critics.

"They have 12 years without competition," I-MAK's Amin said, referring to the exclusivity window granted to biologic drugs by the FDA. "I think that should be enough."