Jul 14, 2021

Lawmakers Showcase How Big Pharma’s Patent Abuse Drives Out-of-Control Prescription Drug Prices

During a hearing Tuesday before the U.S. Senate Committee on the Judiciary’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights, lawmakers on both sides of the aisle hammered Big Pharma for the industry’s anti-competitive and price-hiking practices. The hearing adds to the growing momentum on Capitol Hill to hold brand name drug companies accountable and lower prescription drug prices.

Sen. Amy Klobuchar (D-MN), Chairwoman: For some, the ability to access prescription drugs is what enables them to work, to care for their families and loved ones, preserve their mental health, or just get through the day without excruciating pain. For others, access to safe and affordable prescription drugs is nothing less than matter of life or death. But nearly 20 percent… of older adults report not taking their medicines as prescribed because of cost. That means – and I have met some of these seniors at home – they are cutting pills in half… Americans should not have to choose between risking their lives and risking financial ruin because of the cost of prescription drugs.”

Sen. Mike Lee (R-UT), Ranking Member: “Innovation, competition, and affordable prices are arguably more important to prescription drugs markets than almost any other consumer market we can think of and it’s a consumer market that happens to be particularly important to the sustaining of human life. This makes the continuing rise in drug prices all the more concerning. When we look at data from 2007-2018, the cost of prescription drugs during that period rose three times faster than inflation. And that’s after we take into account manufacturing discounts. Last month, AARP released findings that drug price increases that outpaced inflation had costs taxpayers $38 billion just between 2015 and 2019 alone.”

Sen. Richard Blumenthal (D-CT): “And I want to come right to the point – at least some of this price increase is due to abuse of our patent system. Now I say with no great pride, that the engineers and designers here are many of my own profession, lawyers, who advise how to game that system. And one of the particularly harmful ways to do it is known as product hopping. All of you know what product hopping is – it’s a process by which branded pharmaceutical manufacturers make small, incidental, often irrelevant changes to drug formulas to extend their patent exclusivity and keep competition out.”

Sen. Josh Hawley (R-MO): “Let me ask you to comment on something former FDA Commissioner Scoot Gottlieb said a few years ago, that patent thickets are purely designed to deter the entry of approved biosimilars. His view was that there’s no real business need here – it’s about profits. My question would be that if your clients aren’t trying to behave in an anti-competitive way, then why aren’t all the relevant patent applications for a particular drug filed at once, up-front so to speak, when the product comes to market as opposed to staggered over time in a way that tends to lengthen and lengthen and lengthen the protections?”

In an exchange with Geoffrey Levitt of law firm DLA Piper, who spoke on behalf of the Pharmaceutical Research and Manufacturers of America (PhRMA), Senator Dick Durbin (D-IL) called the industry out for spending more on dividends and stock buybacks than on research and development (R&D) over the last five years — before also debunking the PhRMA witnesses attempt to highlight massive drug company spending on direct-to-consumer advertising as a benefit-add for patients and the health care system.

Sen. Dick Durbin (D-IL): “How do you square the fact that the 14 largest drug makers spent more on stock buybacks than on research and development during the last five years?”

Mr. Geoffrey Levitt (PhRMA): “Thank you Chairman Durbin. So, these are individual, obviously, economic decisions by pharmaceutical companies. And I would say, let me step back and start out by saying, I can assure you that bio-pharmaceutical companies do not invent life-saving medicines in order to make them inaccessible to patients. There’s a balance between innovation and access and innovation is critical. R&D spend is very high and has increased significantly over the past several years. It’s at a peak now in the US accounts for the vast majority of that spending. Companies also put their money into making patients aware of the benefits and potential uses of their products through direct-to-consumer advertising, which is an important means of conveying information to patients about drugs. As you said, prescribers then have the choice of whether to prescribe the drug–”

Sen. Dick Durbin (D-IL): “It doesn’t work that way. Unfortunately, it just doesn’t work that way and you know it. If you get the consumer remembering the name of the drug and remembering the person who skipped across the field of flowers, to go into their doctors and say, ‘I think I need this,’ you know that most doctors instead of getting into a debate are going to prescribe it. That’s why you win on consumer advertising – people are partially educated and doctors neither have the inclination nor time to debate with those patients.”

During the hearing, expert witness Dr. Rachel Moodie, Head of Legal and Intellectual Property for Biosimilars at Fresenius Kabi, helped explain how branded drug makers abuse the patent system to undermine more affordable alternatives.

Dr. Rachel Moodie (VP, Head of Legal and Intellectual Property, Biosimilars for Fresenius Kabi): “The way that the patent system is working right now is that it’s easy to circumvent certain rules that allow you to repetitively claim a similar invention over and over again. And then this means by building up the numbers of patents by a similar applicant we can’t economically clear a path through that many patents. So then you can create an inappropriate monopoly because you are shielding your patents from being scrutinized by the checks and balances that were built into the system.”

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.