Patents and other intellectual property protections make progress possible. They encourage research and development by assuring innovators that their inventions will be protected. And a recent study shows that they work.
Jim Stansel, general counsel for PhRMA, says the strong system of IP protections in the United States allows innovators to create new medicines and make them available to doctors and their patients faster than they can in any other country — all while driving competition and driving costs down.
A lot of people may not associate IP protection with advancing medicines. How does IP fuel the next generation of treatments and cures?
The IP system is the name we use for the legal framework that makes progress possible. IP protections, including patents, give biopharmaceutical companies the ability to take on the high risk of failure, years of time and multi-billion-dollar investments needed to develop an FDA-approved medication.
IP protections don’t just enable innovation — they also pave the way for affordability. Imagine a company has just developed a life-saving cancer treatment and is granted a patent. The moment the patent on that treatment is published, information about the drug becomes public. That means other companies can learn from that innovation.
During patent protection, the company that invested billions in research and development has a chance to earn revenue on its investments while helping fund the company’s future development of new treatments. Generic drugs then enter the market on average 13 years after FDA approval, and, along with biosimilars, help drive down prices by an average of 85%.
I’ve been reading with interest there is increasing competition on the global stage challenging U.S. leadership in biopharma. How is IP critical to helping America maintain its status as a leader in biopharmaceuticals?
Most medicines are developed in the United States because we have a world-leading innovation ecosystem — built on strong IP protections. Along with a strong regulatory system that rewards risk-taking, it provides predictability and fosters collaboration and is what makes America unique.
I’ve seen how it drives investment, sparks competition and creates opportunities, which is a win for American innovation. Research shows that IP-intensive industries like biopharmaceuticals account for 84% of all R&D investment while having an outsized impact on the U.S. economy.
But America’s leadership in advancing innovative medicines isn’t guaranteed. Chinese companies are sponsoring 30% of new clinical trials compared to 35% in the U.S. and recently surpassed the U.S. in oncology trial starts. Lawmakers need to make sure they don’t jeopardize the policies like IP that have helped fuel America’s role on the global stage to advance lifesaving medicines.
Critics claim patents block competition. Are patents getting in the way of affordable drugs?
No company has a monopoly on treating disease and patents do not block competition. In fact, patents drive competition by sharing information early and encouraging manufacturers to develop alternative ways to address diseases.
Our intellectual property framework fuels competition, which drives down costs by encouraging innovators to develop competing brand products different from others already on the market. In fact, most new medicines already have at least one competitor on the market at the time of market entry or will have one shortly thereafter.
This not only leads to improvements in any given class of medicines but also spurs brand-to-brand competition that further drives savings to the system and patients. Leveraging this robust competition, payers negotiate discounts and rebates, which can lower the price of brand medicines by 50% or more, on average.
Today, the top drug classes are highly competitive. In 2024, 16 of the top 30 drug classes had more than four approved medicines, with some classes (e.g., GLP-1s) expected to double in the number of medicines by 2030.
And while brand competition is driving down costs long before the product’s patents expire, generics and biosimilars come in after to provide long-term value to patients and the health care system. These low-cost options saved a collective $3.1 trillion over the last decade alone and today represent 90% of prescriptions filled. A recent University of Chicago study found the average price of prescriptions filled through Medicare and Medicaid is 18% less than in other countries because of our high use of low-cost generics.
Policymakers should focus on reforms that address anti-competitive practices and inefficiencies in the health care system including the role of pharmacy benefit managers. These middlemen block competition by excluding lower-cost generics and biosimilars from formularies. What’s more, large PBMs control 80% of all prescriptions in the U.S and are often compensated based on list price, which experts note can distort the market by incentivizing PBMs to prefer medicines with higher list prices and large rebates over lower-priced alternatives.
IP-intensive industries support higher wages, more international exports and activity, which adds to the country’s economy. But behind these statistics are communities and families. What does IP mean for American workers and the economy?
Our innovation ecosystem isn’t just a driver of scientific progress — it’s a cornerstone of American economic strength and global competitiveness.
Being the global leader in innovation delivers real benefits for the U.S. economy and American workers. Thanks to a strong IP system, we’re able to discover more new medicines, bring them to market faster and ensure broader access for patients than anywhere else in the world.
This system fuels an industry that supports nearly 5 million U.S. jobs and generates over $1.6 trillion in economic output, spreading opportunity across communities nationwide.
Take North Carolina as a case in point. Once ranked 47th in per capita income and reliant on industries like textiles and furniture manufacturing, the state reinvented itself through bold public-private collaboration. The creation of the Research Triangle transformed the region into a life sciences powerhouse.
Today, more than 800 life science companies employ 70,000 people in Raleigh, Durham and Chapel Hill. These companies are building state-of-the-art manufacturing facilities, investing in high-paying jobs, and developing the next generation of treatments and cures.
But the impact goes far beyond labs and research centers. It touches the broader economy: from the workers who build and maintain facilities, to those who service equipment, deliver supplies, and support daily operations. And our companies are reinvesting in these communities — partnering with local colleges, supporting workforce training, and nurturing the next generation of talent.
In short, intellectual property doesn’t just protect ideas — it powers American jobs, strengthens local economies, and ensures the U.S. remains a global leader in innovation.
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