The health care landscape is constantly evolving, and intellectual property (IP) is a key driver of groundbreaking innovation. While discussions about the cost and affordability of medicines persist, it's important to understand how innovation helps drive down health care costs. Here are three key ways innovation and IP in the pharmaceutical sector are instrumental in reducing health care expenses: 

Innovation Encourages Competition and Lower Costs

Pharmaceutical innovation is vital to delivering better care and treatment options. New medicines are transforming how we fight diseases, including cancer, hepatitis C, high cholesterol. As more effective drugs are developed and more advanced and efficient techniques are pioneered, medicine costs decrease as additional market entrants innovate around those already on the market. This increased competition leads to lower prices for patients. For example, the price of medicines used to prevent cardiovascular disease decreased by 95% from 2007 to 2017.

Innovation Drives Significant Savings through Generic and Biosimilar Medicines

IP protections encourage companies to invest in research and development – the foundation of innovative new medicines. This innovation creates a pathway for generic and biosimilar medicines to follow, which in turn drives significant savings. In the United States, 90% of all drugs dispensed in 2022 were generics, and the 10-year savings (2013-2022) from use of generic and biosimilar medicine amounts to nearly $2.6 trillion. 

Innovation Improves Health Outcomes, Driving Down Overall Patient Costs and Increasing Health System Sustainability

The value of pharmaceutical innovation extends beyond the direct benefit to the patient – better health outcomes. Increased medical efficacy can reduce the need for additional care, hospital stays or further treatments, which can decrease costs for patients. In addition, keeping people healthy and out of hospitals promotes a more sustainable health system and allows for better allocation of resources and providers to those most in need. 

Innovation in the pharmaceutical industry – supported by IP protections – and reduced health care costs are deeply connected. By fostering the development of more effective medicines, innovation results in improved health outcomes, decreased costs and increased health system sustainability.