Lawmakers Face Push to Limit Drugmaker Deals as Prices Skyrocket

(Bloomberg Law) -- Lawmakers will have a hard time objecting to legislation aimed at lowering prescription drug prices by limiting deals between name brand and generic manufacturers, Sen. Amy Klobuchar said Tuesday.

“The stakes could not be higher,” Klobuchar (D-Minn.), chair of the Senate Judiciary Committee’s antitrust panel, said at a hearing.

Klobuchar is sponsor of a bill (S. 1428) that would limit arrangements in which brand drugmakers compensate generics for waiting before they enter the market. These types of settlements are called pay-for-delay deals.

“We would get that done,” she said, referring to the legislation.

The panel’s hearing comes amid an increasing government focus on skyrocketing drug prices. Drugmakers have raised prices on over 580 drugs this past January, while more than a quarter of Americans say they and their family couldn’t afford a medication in the past year, America’s Health Insurance Plans said in testimony.

AHIP, which represents insurers, cited research findings that 55% of Americans grew more worried about drug affordability during the pandemic.

House Democrats in May urged the Federal Trade Commission to investigate whether AbbVie Inc. ran afoul of the law with agreements to keep lower-cost versions of its immunosuppressive drug Humira off the market.

President Joe Biden echoed the call, asking the FTC in an executive order to crack down on pay-for-delay settlements while pushing the Food and Drug Administration to work with states on importing Canadian drugs.

Prescription Problem

Lobbying groups are urging lawmakers to consider consumers and generic manufacturers in any drug-related legislation.

“Prescription drugs comprise a very high percentage of medical costs, driving up Americans’ health insurance premiums and the cost of health care delivered by providers whose care includes the administration of those drugs,” AHIP said.

The Association of Accessible Medicines urged Congress to focus on “on the areas where the patent system is out of balance and systematically undermined competition.”

The group defended the use of “skinny labels” on generic drugs that limit their suggested uses to avoid infringing a name brand patent. It also favors strengthening a patent office tribunal in which generic manufacturers can ask to invalidate problematic name-brand patents.

The AAM warned the senators to proceed with caution on proposals to limit deals between generic and name-brand companies. A poorly written bill could dangerously deem “virtually all settlements presumptively anticompetitive.”

That “would severely chill the ability of generic and biosimilar developers to obtain a settlement and disincentivize their ability to challenge patents in the first place.”

Patent Issues

The U.S. intellectual property system was a key focus during the hearing, with witnesses divided over reforming it.

Alden Abbott, senior research fellow at the Mercatus Center at George Mason University, said Congress should be careful in tweaking the patent framework, crediting the U.S.’s “strong intellectual property framework.”

“Congress should not likely legislate in this area, except in cases of clear abuses,” Abbott said.

Name-brand drugmakers also stand behind the current patent system. It enables drug companies “to develop new medicines that save lives” and “alleviate the burden of disease,” including Covid-19, said Geoffrey Levitt of DLA Piper appearing on behalf of the industry group Pharmaceutical Research and Manufacturers of America.

Rachel Moodie, head of legal and intellectual property and biosimilars at the pharmaceutical company Fresenius Kabi, said the pharmaceutical industry “is not currently operating as a true free market system” due to patent practices that cut down on competition and increase costs. One tactic that’s particularly difficult to navigate involves brand drugmakers seeking multiple patents around a drug and its uses that could block entry of a generic version.

“The sheer volume of patents strategically thicketed” around a drug is problematic, Moodie said, given it shields name-brand drugs from scrutiny.

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editors responsible for this story: Alexis Kramer at akramer@bloomberglaw.com; Fawn Johnson at fjohnson@bloombergindustry.com

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