The evergreen patent system: pharmaceutical company tactics to extend patent protections. (Patently Abusive).

BRAND-NAME DRUG COMPANIES SELL more than $130 billion worth of pharmaceuticals in the U.S. marker every year.

The high revenue steam is due in part to new drugs to treat new ailments, and an aging population that is living longer and taking more medications than previous generations.

But the foundation of the brand-name companies' spectacular revenues is the patent system. Once granted regulatory approval for a drug that meets the test for patentability (novelty, usefulness and nonobviousness), brand-name companies have exclusive rights to sell the product for the remainder of the 20-year life of the patent on the drug. The monopoly rights conferred by the patent enable the companies to charge far more than the cost of production, and to earn huge returns on each sale.

When the drug goes off patent and genetic competition commences, prices plummet. The first generic competitor usually drops prices by 30 percent, and full-fledged generic competition with five or six competitors typically brings down the charge to the consumer by 70 to 80 percent.

Naturally, brand-name companies do everything they can to defer generic competition. Critics, including the federal and state cops on the beat, say the companies manipulate a complex legal and regulatory environment to block generics from entering the market. They charge the companies with using tactics including bogus patent claims, collusive settlements with potential generic competitors, new patents on methods of formulating drugs and special legislated patent extensions. The companies typically deploy these tactics in a strategic campaign run in tandem with ever-more elaborate marketing efforts, to ensure ongoing consumer reliance on expensive brand-name products.

These practices are now coming under challenge, as rising prescription drug costs spur new scrutiny of the pharmaceutical industry. Consumer groups, states and employers who provide insurance are now all pursuing lawsuits against the drug companies, alleging a host of improper and illegal manipulations of the patent and regulatory system to protect pharmaceutical company monopolies. The hope of the entities bringing these suits, as well as the lawyers who are helping pay for them, is that -- following the breakthroughs in the tobacco arena -- the cases will develop into the next round of major class-action litigation.