DOSE OF REALITY: PATENT HEARINGS OFFER OPPORTUNITY TO HOLD BIG PHARMA ACCOUNTABLE FOR ANTI-COMPETITIVE PRACTICES

Lawmakers Can Highlight Tactics Designed to Block More Affordable Alternatives from the Market — Add to Momentum for Market-Based Solutions 

In Washington this week, Congress will hold a pair of hearings on the patent system, offering an opportunity for lawmakers to detail Big Pharma’s anti-competitive practices that drive higher prescription drug prices and add to the momentum for action on market-based solutions to hold brand name drug companies accountable. On Wednesday, the U.S. Senate Committee on the Judiciary Subcommittee on Intellectual Property will hold a hearing examining, “The Patent Trial and Appeal Board: Examining Proposals to Address Predictability, Certainty, and Fairness.” On Thursday, the U.S. House Committee on the Judiciary Subcommittee on Courts, Intellectual Property, and the Internet will hold a hearing on, “The Patent Trial and Appeal Board After 10 Years: Impact on Innovation and Small Businesses.”

Ahead of the hearings, get a Dose of Reality on Big Pharma’s egregious practices designed to game the system to maintain monopolies, undermine more affordable alternatives and boost profits by keeping drug prices high.

PATENT ABUSE: ‘BUSINESS AS USUAL’ FOR BIG PHARMA

Big Pharma has a long history of price gouging American patients through patent abuse schemes, like patent thicketing and product hopping, to hinder generic competition and maintain monopolies over their biggest money makers.

Targeting Blockbuster Products for Patent Abuse

A May 2022 study published in JAMA Health Forum found brand name drug companies target products that generate major profits for reformulation to extend monopoly pricing power and block generic competition from entering the market.

• The results of the study showed that “of 206 brand-name drugs approved in tablet or capsule form by the U.S. Food and Drug Administration between 1995 and 2010, approval of new formulations was four times more likely among blockbuster drugs.”
• The study also found that drug makers sought to pursue new formulations, “less frequently once generic competitors entered the market.”

Patent Abuse Delays Access to Lower Cost Treatments 

A 2021 report from the U.S. House Committee on Oversight and Reform found that companies responsible for just 12 of the best-selling drugs in Medicare obtained more than 600 patents, effectively blocking competition from more affordable alternatives for decades.

• In fact, the Committee report states that the patents already secured for these 12 drugs, “could potentially extend their monopoly periods to a combined total of nearly 300 years.”

Big Pharma’s Patent Gaming Imposes Unsustainable Costs

Big Pharma’s anti-competitive behavior, including tactics like product hopping and patent-thicketing, delay more affordable alternatives from coming to market and cost patients and our health care system billions of dollars. The American public faces unsustainable costs because of this anti-competitive behavior.

• A May 2021 report found delayed alternatives to AbbVie’s blockbuster drug Humira will cost the U.S. health care system an estimated $19 billion by 2023.
• A July 2020 report estimates patent gaming around Imbruvica will cost the U.S. health care system $41 billion.

A September 2020 study from Avik Roy and Gregg Girvan of the Foundation for Research on Equal Opportunity (FREOPP) found that ballooning spending on U.S. prescription drugs is being particularly driven by Big Pharma’s abuse of the patent system to undermine biologic and biosimilar competition.

• One-way Big Pharma is able to maintain monopoly power is through ‘patent thickets.’ By seeking a multitude of patents for marginal aspects of a biologic, brand name drug companies are able to create a ‘thicket’ of patents that can dramatically extend exclusivity periods — blocking cheaper generics, or biosimilars, from coming to market.
• Another way Big Pharma maintains monopoly power is through ‘submarining’ and ‘evergreening,’ in which a branded drug maker purposefully delays the filing and issuance of a patent in order to extend market exclusivity of drug for as long as possible.
• Without action, the study’s authors estimate the anti-competitive nature of the biologic drug marketplace will cost American patients more than $30 billion from 2015-2029.

A Case Study: Brand Name Inhalers

An academic analysis published in Health Affairs in May 2022 found manufacturers of brand name inhalers used to treat asthma and chronic obstructive pulmonary disease engage in anti-competitive tactics to keep more affordable generic competition from entering the market.

• According to the analysis, manufacturers are guilty of “combining old ingredients into new inhalers; shifting ingredients from one inhaler to another; and adding new patent and exclusive rights bestowed by regulators after approvals.”
• Specifically, the study “examined 62 inhalers approved by the Food and Drug Administration between 1986 and 2020 and found 53 — or 85 percent — were brand-name products with an average of 16 years of patent protection. Yet only one inhaler contained an active ingredient with a new mechanism of action, while more than half of the patents were on devices, not any of the ingredients.”
• Among the more egregious examples, one branded product was granted extended market exclusivity 28 years after the drug’s initial approval.

A Call for Action: NYT Editorial Board Endorses Patent Reforms

A recent editorial from The New York Times highlights how Big Pharma games the system to keep drug prices high and calls for reforms to increase competition and help lower drug prices for the American people.

The editorial board notes that Big Pharma relies on bogus rhetoric to oppose drug pricing solutions and highlights how the industry’s egregious practices are driving higher costs, saying, “drugmakers for decades have argued that patents are essential to American innovation. For all that lip service to medical advancement, though, a recent investigation by the House Oversight Committee concluded that market share is more likely the point. Twelve of the drugs that Medicare spends the most on are protected by more than 600 patents in total, according to the committee. Many of those patents contain little that’s truly new. But the thickets they create have the potential to extend product monopolies for decades. In so doing, they promise to add billions to the nation’s soaring health care costs — and to pharmaceutical coffers.”

The editorial board also highlights the staggering number of patents granted for existing drugs, “nearly 80 percent of the drugs associated with new patents between 2005 and 2015 were not new.”

Endorsing solutions to promote competition, the editorial board argues policymakers should “enforce existing standards… set a high standard for what deserves patent protection in the first place and then to honor it… improve the process for challenging bad patents… eliminate potential conflicts of interest… collaborate with other agencies… [and] let the public participate.”

Learn More About Cracking Down on Big Pharma’s Anti-Competitive Tactics

In case you missed it, the U.S. Federal Trade Commission and U.S. Department of Justice Antitrust Division recently hosted a two-day virtual workshop on enforcing antitrust laws in the pharmaceutical industry. The workshop brought together administration officials, state attorneys general staff, and international enforcement partners to address Big Pharma’s anti-competitive behavior, as well as concerns about pharmaceutical mergers and acquisitions. Read more on what experts and officials had to say at the workshop HERE.

Read more about how Big Pharma’s patent abuse blocks competition, harms consumers and contributes to ballooning taxpayer spending HERE.

Read more on why Big Pharma’s tired argument that innovation justifies their out-of-control prices doesn’t hold up to scrutiny HERE.

Read more on market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.