It’s hard to find bipartisan consensus among lawmakers in Congress these days. But there’s widespread agreement on calls for pharmaceutical patent reform. The steep prices of brand-name drugs in the United States can in part owe to possibly anti-competitive tactics used by pharmaceutical manufacturers to extend their monopoly pricing power and obstruct cheaper generics and biosimilars from entering the market.
Former Food and Drug Administration Commissioner, Scott Gottlieb, a Trump appointee, proclaimed in 2018 the need to “end the shenanigans” that prevent generic and biosimilar products from reaching the market.*
Today, multiple bipartisan bills have been introduced that seek to rein in different ways that drug companies may be abusing the patent system. The Federal Trade Commissioner Lina Khan has chimed in as she targets “improper or inaccurate patent listings … that keep brand name prices artificially high.”
According to Bloomberg News, between 2005 and 2015, 74% of new drug patents issued were for drugs already on the market. And of the approximately 100 best-selling drugs examined in another study , nearly 80% received an additional patent to extend their monopoly period beyond what was originally intended.
David Mitchell, founder of Patients For Affordable Drugs NOW and a cancer patient, testified before the U.S. Senate Judiciary Committee on May 21 about what he views as anticompetitive tactics deployed by drug companies to extend monopolies on branded products.
Mitchell urged bipartisan reforms that strike an “appropriate balance” between ensuring patents reward genuine innovation while facilitating timely competition to make prescription drugs more affordable for patients.
In Mitchell’s testimony, he highlighted how pharmaceutical firms manipulate the patent system to prolong their monopolies and block lower-cost generic and biosimilar competition from entering the market. He pointed to strategies like product hopping, patent thickets and pay-for-delay deals. Product hopping is when a company switches a patient population from a branded product whose patent is expiring and therefore facing imminent competition to a different formulation of the original drug that has a later expiring patent. A patent thicket references the numerous patents drug companies may file to create hurdles to market entry for prospective generic or biosimilar competitors. In a pay-for-delay situation, brand name drug manufacturers induce competitors to delay selling a generic or biosimilar version of a drug.
A prime example of a very lengthy monopoly is the arthritis drug Enbrel, which was first approved by the FDA in 1998. As a result of a slew of patent filings and litigation there won’t be biosimilar competition in the U.S. until 2029, despite there being two approved biosimilars: Erelzi in 2016 and Eticovo in 2019. Meanwhile, since 2017 Enbrel has faced biosimilar competition in Europe, where patent battles are much less common.
In defending intellectual property rights, the pharmaceutical industry maintains that patent reform isn’t needed. It cites the fact that more than 90% of prescriptions in the U.S. are for generics or biosimilars.
Nonetheless, the existence of certain protracted monopolies isn’t in dispute, along with the corresponding potential barriers to market entry for competitors.
Mitchell voiced strong support for a package of bipartisan bills in the Senate that aim to keep in check the alleged abuses.
The bills before the Senate are designed to close loopholes in the patent system. S. 150, for example, or the Affordable Prescriptions for Patients Act, cracks down on patent thickets and product hopping. The legislation authorizes the Federal Trade Commission to enforce and impose limits on patent litigation involving prescription drugs.
In this context, the bill stipulates that product hopping has occurred when a pharmaceutical manufacturer, after receiving notice that the FDA is processing an application to market a competing generic or biosimilar, takes certain actions such as withdrawing the branded medication from the market and selling a follow-on product.
A drug manufacturer may of course rebut these presumptions by demonstrating that its conduct was not intended to limit competition.
The S.150 Act also seeks to limit the number of patents that an originator biological product manufacturer can make a claim to in a patent infringement lawsuit against a company that wants to to sell a biosimilar version. But S.150 has been stuck in the Senate for more than 15 months, according to Axios.
There is also a bill that aims to improve information sharing between the FDA and the U.S. Patent and Trademark Office: S.79, or the Interagency Patent Coordination and Improvement Act. Here, lawmakers want the PTO to assist the FDA in ensuring that “irrelevant patents” are never listed in the Orange Book, which enumerates all approved drug products with therapeutic equivalence evaluations. The Orange Book includes all related patent and exclusivity information. By introducing S.79 lawmakers appear to want to systematize patent reform and information-sharing between agencies, going forward. But this proposal is also in limbo, having been introduced more than 15 months ago as well.
In parallel to what Congress is proposing, the FTC is directly challenging drugmakers on what it deems are improperly listed patents in the Orange Book, with respect to 20 brand name pharmaceuticals, including the diabetes and weight loss medication, Ozempic. The FTC sent warning letters to 10 drug manufacturers at the end of April. Companies that received such letters had until a few days ago to respond by withdrawing or updating their patent listings, or certifying that they are legitimate. It’s not been publicly revealed if and how the companies decided to reply.
In brief, while bipartisan efforts to legislate or otherwise bring about pharmaceutical patent reform are heating up it’s not yet clear if and when material changes will be enacted.
