An Arm and a Leg: The Accidental Architect of America’s Drug Patent Problem

Depending on whom you ask, Alfred Engelberg could be a hero or a villain in the story of American pharmaceuticals. The patent lawyer helped write legislation that led to a dramatic increase in the number of generic drugs on the market. He also contributed to a patent system that gives pharmaceutical companies monopolies on their most lucrative drugs, blocking generic competition and keeping prices high along the way. An Arm and a Leg host Dan Weissmann traces Engelberg’s story back more than 50 years, from a scrappy childhood on the Atlantic City boardwalk to watching President Ronald Reagan sign his bill into law at the White House Rose Garden . Today, Engelberg advocates for policy changes he believes will enable more generic drugs to reach the market faster. Dan Weissmann @danweissmann @danweissmann.bsky.social Host and producer of "An Arm and a Leg." Previously, Dan was a staff reporter for Marketplace and Chicago's WBEZ. His work also appears on "All Things Considered," Marketplace, the BBC, 99% Invisible, and "Reveal," from the Center for Investigative Reporting. Credits Emily Pisacreta Producer Claire Davenport Producer Adam Raymonda Audio wizard Ellen Weiss Editor Click to open the Transcript Transcript : Why drugs cost so much, 101: Medicine monopolies Note: “An Arm and a Leg” uses speech-recognition software to generate transcripts, which may contain errors. Please use the transcript as a tool but check the corresponding audio before quoting the podcast. Dan: Hey there– We are kicking off a new series here — We’re calling it An Arm and a Leg 101. We’ve spent years of reporting on two huge questions: Why does health care cost so freaking much? And what can we maybe do about it? We’ve been chasing answers one story, one question at a time. Now, we’re pulling together some of what we’ve learned. Digging a little deeper, going a little broader. Starting with why so many drugs cost so much. One of the first questions I ever asked — one of our first stories — was: How can insulin be so expensive? Wasn’t it discovered in the early 20th century? Shouldn’t it be a generic drug by now? You know, cheap? And part of the answer I got was: Insulin has been transformed since the early 20th century. A lot. A medical researcher named Jing Luo told me: Today’s insulins are a long way from what we had a hundred years ago. Jing Luo: They’ve been really modified at a molecular level. It’s cool stuff. It’s super cool stuff. And you know, there are multiple Nobel prizes in physiology and medicine that have made this happen. Dan: And all that super-cool stuff, those amazing discoveries, got patented. Meaning: The patent-holders– the pharma companies — got a monopoly on those amazing discoveries. The pharma companies claimed patents — and monopolies– on a bunch of other things too. Not all of them amazing. But each new patent can mean another delay for a generic version coming to market. Jing Luo: Companies can stack dozens of patents on top of each other to try to thwart generic competition because they can say, look, we’ve got three patents on the active ingredient. We’ve got patents on the medical uses of the active ingredient. We’ve got patents on the non-active excipient associated with this ingredient. We’ve got multiple patents on the devices, and so you who are trying to enter this space will sue you for patent infringement on all of them. Dan: A patent guarantees you at least a 20-year monopoly. Drugs can generally get an extra five. And these extra patents — secondary patents –can keep you protected LONGER. If you don’t file them at the same time as the original: To talk about a drug that’s in the news right now. The original patent on the active ingredient in Wegovy and Ozempic actually expired this year.. The extra five years extends it to the early 2030s. But dozens of extra patents — secondary patents, filed later — mean that here in the U.S., we might not see cheaper generic versions until 2042. Or later. And as Jing Luo told me: This strategy isn’t a secret. It’s an industry cornerstone. Jing Luo: When you listen to these like CEOs of pharma companies being interviewed at CNBC, you know, they’d be like, well, what about generic competition for this product? And they’ll just keep saying, no, no, no. We’ve got this really robust patent portfolio. We can withstand any challenge. We’re gonna tie this up in courts forever and don’t worry about it.We’re gonna continue this gravy boat for a long, long time. That’s the way they reinsure investors. Dan: A robust patent portfolio. ?Or what researchers and advocates call a patent thicket. They say quality matters less than quantity. The numbers are wild. According to one study , the 10 best-selling drugs for 2021 — drugs for cancer, HIV, arthritis — were protected by a combined total of seven hundred and forty-two patents. With hundreds more “pending.” When these add-on patents get challenged in court, they actually get tossed out more often than primary patents.. But lawsuits cost money. A robust patent portfolio — a patent thicket — means generic companies would need to be ready to file a LOT of them. So, we wanted to know: How did all this happen? How did these games get started? It turns out, there is one guy who can tell you the story from the beginning, for better and for worse. Who helped shape it. Made millions of dollars from it. Saw its flaws. And has spent most of the last 30 years trying to fix them. Hie’s a lawyer named Al Engelberg, and he’s 86 years old. Alfred Engelberg: I tell people all the time, I live in a world, a pharma world where half the people think I’m dead and the other half wish I was. Dan: Al Engelberg’s story is the story of generic drugs in America. And it’s a wild ride. This is An Arm and a Leg — a show about why health care costs so freaking much, and what we can maybe do about it. I’m Dan Weissmann. I’m a reporter, and I like a challenge. So the job we’ve chosen here is to take one of the most enraging, terrifying, depressing parts of American life, and bring you something entertaining, empowering, and useful. ?Al Engelberg’s parents fled Nazi Germany in the late 1930s. He was born here, less than a year after they arrived. They had nothing. And here’s where they made their new life. Retro news reel: We are flying over a well-known eastern city. That is remarkable because manufacturing is almost non-existent. A city whose principle business is the entertainment of millions. Atlantic city, often called the vacation capital of the nation Dan: Al likes to say he learned most of what he knows about practicing law on the Atlantic City boardwalk, by the time he was 16. Alfred Engelberg: We grew up very, very fast there. I started working when I was about nine or 10 and, and there were lots of opportunities on the boardwalk. Dan: His first “job” was crawling around under the boardwalk, looking for loose change. Alfred Engelberg: But I went on to work at hotdog stands and at an illegal bingo game for the local mob. Dan: And in every job, Atlantic City drove home its major lesson: Cheating — hustling — is something you’ve gotta expect. At this illegal bingo parlor, Al’s job was walking between tables, doling out bingo cards for a dime apiece. The bosses hired college kids to walk behind kids like Al, to keep him honest. Alfred Engelberg: I mean, these guys are running an illegal game, but they still need to count, and they still inherently don’t trust anybody. Dan: Which was correct. Al says the college kids had their own hustle: They’d have him set aside a dollar or two before turning in his dimes — split that dollar with him fifty-fifty — and tell the bosses Al’s count was fine. Alfred Engelberg: And everybody knowing that the counts were wildly inaccurate anyway ‘cause the little old ladies were, were stealing cards. Everybody in the room had their own thing going, you know, from the customers on. Dan: After Al made it out of Atlantic City, his unique on-the-job education continued. He studied chemical engineering at Drexel, then took a job as a patent examiner while going to law school at night. And at that job, he learned: The patent system was ripe for hustling. Partly because most of his colleagues weren’t necessarily giving the job their all. Like him, most patent examiners were working their way through law school. And they were sneaking time to study on the job. Alfred Engelberg: We used to be able to cut our notes down so they fit in these file drawers with the patents. And we would be reading your notes and if your boss came by, you would just drop a patent on top of the notes. Dan: You could say it was Atlantic City all over again. Everybody in the job is sneaking something for themselves — in this case, time. And Al Engelberg could see that, even if his colleagues gave it their all, they were too green to do their job well. A patent examiner’s job — deciding whether a proposed invention deserves a monopoly (which at that time was 17 years) — means deciding whether the idea for that invention would be obvious to “a person of ordinary skill in that field.” Alfred Engelberg: And most of the examiners had never worked in that field and had absolutely no idea. And this is the big leagues. You’re granting somebody a monopoly for 17 years, and it seemed ridiculous on its face. Dan: Al cut his own path at the patent office. He’d worked his way through engineering school, in manufacturing plants, he saw what people of ordinary skill in that field solve problems every day. So he specialized in examining patents he actually knew something about. That got him promoted, then it got him recruited by a…