THEY SAID IT! LAWMAKERS AND EXPERTS SUPPORT BIPARTISAN, MARKET-BASED SOLUTIONS TO LOWER DRUG PRICES, FOSTER GREATER COMPETITION

U.S. House Judiciary Subcommittee Hearing Builds Bipartisan Momentum for ETHIC Act and Skinny Labels, Big Savings Act to Curb Big Pharma’s Anti-Competitive Tactics That Block More Affordable Alternatives from the Market

In case you missed it, the U.S. House of Representatives Judiciary Subcommittee on Courts, Intellectual Property, Artificial Intelligence and the Internet held a hearing Thursday titled, “Medicines and IP: Balancing Innovation and Access.”

Lawmakers from both parties highlighted how Big Pharma blocks competition by gaming the system, including by creating “patent thickets” – where drug companies file dozens or hundreds of patents on a single drug to block more affordable alternatives to high-priced brand name drugs from entering the market, for months, years or even decades.

Policymakers and experts called for action on bipartisan solutions like the Eliminating Thickets to Increase Competition (ETHIC) Act (H.R. 3269), Skinny Labels, Big Savings Act (H.R. 6485) and additional market-based policies to eliminate barriers to greater competition to effectively lower drug prices for American consumers.

During the hearing, Representatives and health care experts emphasized that patent thickets and prolonged exclusivity for brand name blockbuster drugs, enabled through tactics like exploiting loopholes in the skinny label pathway, continue to delay competition and keep drug prices high. Members and experts pointed to Big Pharma’s anti-competitive behavior and the need for more affordable generic and biosimilar alternatives to reach the market more quickly, to effectively lower drug prices for American consumers.

Here is what lawmakers and health care policy experts had to say:

U.S. Representative Darrell Issa (R-CA-48), Chairman, House Judiciary Subcommittee on Courts, Intellectual Property, Artificial Intelligence and the Internet: “For decades, the United States has led the world both in original innovations and in generic development… We’re proud of that, but like anything else, pride in the past does not equal competitiveness for the future… The consumer clearly does pay more for a product during its first 20 years than it pays when biosimilars and generics become available… Our information on [branded drug company exclusivity for] biosimilars is much more like 20 or 21 years… So much of what pharma takes credit for, in fact, around the world, are doctors making discoveries that then lead to that innovation… Skinny labels and physicians making decisions off patent have been around for a long time and they’re really first cousins in terms of finding ways to help the patient.”

Michael Carrier, Board of Governors Professor of Law, Rutgers Law School: “Patent thickets are most concerning in the pharmaceutical industry. There’s no other industry in which the company can collect as many patents as it wants just to keep competitors off the market… I’ve done empirical research with Sean Chu where we found that continuations which are based on the earlier patent, there’s less innovation going on here, are a lot more frequent in the pharma industry than other settings. The ETHIC Act would be a very effective way of dealing with anti-competitive thickets.”

Rachel Goode, Senior Vice President and Head of Legal and Intellectual Property, Fresenius Kabi: “Now they [pharmaceutical companies] use different descriptive terms or obvious variations to claim essentially the same invention. There are real examples of duplicate patents where one claims treating a human and the other claims treating a patient, and one claims treating the named disease, and the other claims reducing symptoms of the same disease. This is not even incremental innovation. Continuation patents provide no new information to the public. We colloquially call this strategy patent thickets. Patent thickets are not a myth.”

The Skinny Labels, Big Savings Act would clarify the rules so generic manufacturers are not unfairly sued for offering lower-cost alternatives. Supporters emphasized Congress can preserve valid patent rights while restoring certainty to a process that has already saved patients and taxpayers billions of dollars.

U.S. Representative Zoe Lofgren (D-CA-18): “Americans are facing a prescription drug affordability crisis, really. Americans are paying more for prescription drugs than almost anyone else in the world. US drug prices are nearly three times higher than prices in peer countries, and nearly one in three Americans report not taking their medication as prescribed because of costs, so these issues are very important to the American people. And one of the reasons why I was glad to join Congressman Cline in introducing the Skinny Labels, Big Savings Act is this is a bipartisan bill. And I believe it would get lower cost generics to patients sooner, while preserving valid patents and real innovation, which is important to me and every member of this panel… I think it’s important to describe what a skinny label is. It allows a generic company to compete for uses of a drug that are no longer under patent while leaving the patented uses protected.”

Rachel Goode, Senior Vice President and Head of Legal and Intellectual Property, Fresenius Kabi: “I want to address skinny labeling. Congress created this pathway as a way to expedite generics and biosimilars into the hands of patients as soon as the branded drug had some uses that were no longer on patent while some uses were still on patent, carefully balancing the interests of the branded drug companies with the generic drug entrant. Today this balance is starting to break down with seemingly simple conduct such as calling a drug a generic drug or talking about the sales of a branded drug company amounting to patent infringement. So, we need Congress to step in and clarify the skinny label pathway.”

After the U.S. Supreme Court’s decision in Hikma Pharmaceuticals USA Inc. v. Amarin Pharma, Inc. preserved an important pathway for generic competition, policymakers and experts said it still left work to be resolved through legislation, especially for preserving the pathway for biosimilar competition.

U.S. Representative Ben Cline (R-VA-06): “We want to make sure that generics continue to drive down costs, as was argued in the case. Generics have saved patients and insurance payers an estimated $2.9 trillion over the past decade. This is something that has benefited my constituents, constituents of every member up here, all Americans, and we should enact laws that continue to encourage their use. The [Supreme Court] decision today does not reach biosimilars, but our bill does. The Skinny Labels bill does. The decision today is a small molecule Hatch-Waxman case that says nothing about biosimilar carve-outs. Our bill amends Section 271 to extend the same safe harbor to biologics approved under Section 351K, closing a gap that the ruling leaves wide open. The statute that we need would provide something that is absent from the court decision – durability. And even a unanimous ruling leaves a line to be drawn, fact by fact, in the lower courts.”

Michael Carrier, Board of Governors Professor of Law, Rutgers Law School: “I think it is a very positive decision. It was unanimous. It made clear that certain types of conduct, at least in this case, did not lead to a finding of induced infringement. But there still is a different role for Congress to play. If I were the brand firm, I would go back to the Wayback Machine and find one tiny piece of evidence that the Supreme Court didn’t talk about, file another lawsuit, and we’re off to the races. The Supreme Court, even though it was unanimous, cannot act with the certainty that Congress can. The Supreme Court also only applied to one context, not the biosimilar context. So, I still think even today’s decision does not displace the role for Congress.”

Michael Carrier, Board of Governors Professor of Law, Rutgers Law School: “Generally, when we think about generic competition, we think about affordable drugs. We all are on prescription drugs or know someone who is. Historically, the rules were clear [but]… the skinny label pathway is drying up. Patent thickets are arising in ways that they were not at the time of the Hatch-Waxman Act… That’s why the skinny label path is so important, because it allows generics to enter the market without the hassle of litigation, without that 2.5-year delay. Skinny labels are absolutely crucial to lowering prices for US patients. The problem is that the Federal Circuit has said that this commonplace activity of a label calling the product a generic equivalent of sales figures, that this can induce patent infringement. The Supreme Court less than an hour ago said no, that’s not right. But the Court decided this based on the pleading standards in court, which is different than what you as a Congress can do. What you can do gives more certainty than what the Supreme Court did.”

Industry experts outlined how the ETHIC Act targets abuse of the patent system by cutting down on excessive, duplicative drug patents that Big Pharma uses to extend monopoly pricing. The legislation would streamline patent litigation, safeguard quality patents that improve existing drugs and promote faster market entry of lower-cost generics and biosimilars.

Rachel Goode, Senior Vice President and Head of Legal and Intellectual Property, Fresenius Kabi: “The ETHIC Act is pro-innovation, because right now we see pharmaceutical companies stacking duplicate patents on their old cash cows, and what they should be doing is innovating more unique patents, looking for new uses of these drugs… Under the ETHIC Act, pharmaceutical companies can litigate one patent per cluster, so it eliminates the duplicate litigations. At the same time, this incentivizes innovation because the more unique patents that a company gets on the same drug, the more patents they can litigate against competition… This reform will bring billions of dollars in healthcare savings, which most importantly will help patients to afford their drugs.”

These bipartisan, market-based solutions would help prevent Big Pharma from gaming the system, foster greater competition and deliver savings for patients, taxpayers and the U.S. health care system.

Read more on the ETHIC Act and Skinny Labels, Big Savings Act HERE.

Read more on how Big Pharma games the system to block competition and keep drug prices high HERE.

Read more on bipartisan, market-based solutions to hold Big Pharma accountable HERE.