The Cost of Confusion: The Paradox of Trademarked Pharmaceuticals

Abstract

The United States spends nearly $1,000 per person annually on drugs — forty percent more than the next highest spender, Canada, and more than twice the amount France and Germany spend. Although myriad factors contribute to high drug spending in the United States, intellectual property law plays a crucial and well-documented role in inhibiting access to cheaper, generic medications. Yet, for the most part, the discussion of the relationship between intellectual property law and drug spending has centered on patent protection. Recently, however, a few researchers have turned their attention to a different avenue of exclusivity — trademark law. New studies suggest that pharmaceutical trademarks are diminishing the ability of physicians and consumers to accurately understand the relationship between generic and brand name medications. This paper synthesizes and relies on that research to demonstrate that trademarks in the pharmaceutical industry are at odds with the theoretical foundations of trademark law. The conventional justification for trademark protection is two pronged: trademarks not only minimize consumer confusion but also ensure manufacturers maintain consistent product quality. Relying on pharmaceutical case studies and behavioral research, this paper contends that pharmaceutical trademarks and trade dress are performing the opposite functions. Instead of reducing consumer confusion and enhancing market efficiency, pharmaceutical trademarks are actually confusing patients into believing that trademarked and generic drugs are distinct medications, leading to wasteful spending and even substantial morbidity. Accordingly, this paper encourages policymakers to reexamine the utility of trademarks in the pharmaceutical industry and ultimately suggests that such trademarked names should be replaced with a different type of mark — one that serves to distinguish a drug’s manufacturer without differentiating the drug itself from identical generics. Such an approach has the potential to not only save millions of dollars, but also improve patient outcomes.