Senate Targets Hoarding of Drug Patents to Deter Competition
(Bloomberg) -- U.S. senators want to stop brand-name drugmakers from using an arsenal of patents to thwart generic competition, a tactic used by makers of some of the world’s most expensive and best-selling medicines.
Senators John Cornyn, a Texas Republican, and Richard Blumenthal, a Connecticut Democrat, proposed legislation on Thursday that would give the Federal Trade Commission the help it needs to go after pharmaceutical companies that use so-called patent thickets. Drugmakers sometimes secure more than 100 patents over a product’s lifetime, which can deter generic firms from the costly and time-consuming task of challenging them in court.
“Using practices that would make the robber barons of the Gilded Age blush, Big Pharma has crushed competition and stifled access to cheaper generic drugs to squeeze billions out of families, businesses and the government,” Blumenthal said.
The move comes as both chambers of Congress near consideration of legislative packages aimed at reducing drug prices. President Donald Trump said Thursday at an event at the White House that his administration may allow states to buy drugs from other countries where treatments are substantially cheaper.
“It’s pretty pathetic, but that’s the way it works,” Trump said.
Florida Governor Ron DeSantis, a Republican, said in February he would create a drug importation program for his state.
Cornyn and Blumenthal hope to include the bill in a package meant to reduce drug prices that the Senate is expected consider later this year. The bipartisan bill would define patent thicket practices as anticompetitive to make it easier to bring antitrust lawsuits against drugmakers that use the patent system to block competition.
“Judges have a hard time balancing innovation versus competition,” said Michael Kades, who spent 20 years at the FTC as an antitrust lawyer. “Sometimes it makes sense for Congress to draw that line and then courts can just apply that law.”
Currently, the FTC has to prove a pharmaceutical company has a monopoly, which can be tough for courts to accept when other brand-name competitors exist but generic competition doesn’t, as in Humira’s case, said Kades, director of markets and competition policy at the Washington Center for Equitable Growth.
AbbVie Inc.’s Humira, which brought in $20 billion in revenue last year, is a rheumatoid arthritis drug that also treats other autoimmune conditions. The drug is shielded from competition by more than 100 patents. It’s been around more than 16 years and competes with Johnson & Johnson’s Remicade. But it doesn’t have any generic competition.
AbbVie Chief Executive Officer Richard Gonzalez told a Senate hearing in February that Humira’s patents evolved as the company discovered new applications for the drug.
Patent thickets are mostly confined to biologic drugs made from living organisms because they are more complex to make and therefore offer drugmakers more manufacturing steps to patent.
Cornyn and Blumenthal’s bill, the Affordable Prescriptions for Patients Act, would define some drug industry practices as anticompetitive. One, called product hopping, involves slightly tweaking a brand-name product, such as reformulating a pill to be once a day from twice-daily. The company then pulls the older product off the market, forcing patients to switch to the once-daily drug, just before the main patent expires.
One piece of legislation to be included in any drug-pricing package is from Senators Chuck Grassley, an Iowa Republican, and Amy Klobuchar, a Minnesota Democrat. It would give the FTC similar help going after pay-for-delay tactics, when a brand-name drugmaker pays a generic company to keep its low-cost version off the market for a set period of time.
Another likely measure to be in the package is one called the Creates Act from Grassley and Patrick Leahy, a Vermont Democrat, meant to deter brand-name pharmaceutical companies from withholding product samples from generic firms that need them to conduct research and bring a low-cost version to market.
The Democratic-controlled House could take up drug pricing bills as early as next week, packaged with measures to shore up the Affordable Care Act, most likely making the legislation unpalatable for many Republicans. The House Rules Committee will meet next week on the package, the final step before legislation is considered by the whole chamber.
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