Specter of FTC Involvement Raised at Senate Hearing About Intellectual Property

May 8, 2019

The idea of giving the Federal Trade Commission (FTC) more authority to cut through patent thickets blocking biosimilar competition was raised Tuesday during a hearing of the Senate Judiciary Committee about intellectual property, patent law, and the impact on drug prices.

This story has been updated.

The idea of giving the Federal Trade Commission (FTC) more authority to cut through patent thickets blocking biosimilar competition was raised Tuesday during a hearing of the Senate Judiciary Committee about intellectual property, patent law, and the impact on drug prices.

The proposal came up right after an exchange with Senator John Cornyn, R-Texas, and James Stansel, JD, executive vice president and general counsel for PhRMA, the lobbying association for the pharmaceutical industry.

During the hearing, Cornyn asked the witnesses assembled before him—2 law professors, 1 patient representative, a state Medicaid official, and Stansel—a question after recapping how patents have been used to extend protections for drugs created years ago.

“Is there anyone assembled who would like to defend the status quo?” he asked.

After Cornyn was met with a brief silence, Stansel spoke up. “I think it is important, when we are talking about innovation, that it is incremental,” he said. “Products come to the market and they continue to be innovated,” he said, citing the example of oncology drugs where changes don’t necessarily mean that the life of the patent would be extended.

But Cornyn brought up the case of AbbVie’s Humira, which was mentioned several times during Tuesday’s hearing as well as other hearings so far this year in Congress. Humira, the brand-name adalimumab, has 136 patents, he said, keeping biosimilar competitors out of the marketplace until 2023. He also mentioned Sanofi, which, he said, has 70 secondary patents on its Lantus insulin product.

“Is there that anything we can or should do, when so many different patents are filed on products that are not exactly innovative anymore, that have been on the market for years and years? Doesn’t this strike you as being anticompetitive?” Cornyn asked.

After Stansel replied with a statement about the role of the US Patent Office, Cornyn interrupted him again with an analogy about antiracketeering statutes. Just as a financial transaction may be legal on its face, under certain circumstances government prosecutors may view it as money laundering, if the transaction is structured a certain way, the senator said. While patent arrangements may be legal under current law, he said, “do you think it’s beyond the pale to say it could be a structuring of those patents in such a way that could be anticompetitive, and not in the best interest of patients?”

After Stansel said that the patent system “is already designed to address that,” Cornyn cut him off again and repeated his question. Courts can handle patent disputes, Stansel said.

Cornyn then turned to Michael A. Carrier, JD, a distinguished professor of law from Rutgers Law School, and asked about turning to the FTC “to provide an equitable remedy.”

“I think that would make perfect sense,” said Carrier. “There’s no way a biosimilar can deal with 100 patents. A lot of these patents are invalid, by the way,” he said, citing inter partes review.

“This is an abuse of the system and giving the FTC the power to deal with it would be a great development,” Carrier said, to murmurs from people in the hearing room.

Later in the day, a Cornyn spokesman said in an email to The Center for Biosimilars® that the senator is planning to introduce a bill to allow the FTC to bring antitrust suits against companies that use patents to shake off competition and extend exclusivity on drugs. The legislation would aim to improve patient access to less expensive drugs, but without hurting innovation or infringing on patent rights.

For the most part, the overall context of the hearing went back and forth on the need to maintain innovation for new drug discoveries while protecting patients from shock at the pharmacy counter. It occasionally delved into other issues, like pricing for brand drugs overseas compared with in the United States and the impact on manufacturers’ bottom lines.

But most speakers usually stuck with the theme of balancing access, affordability, and innovation. David Mitchell, founder of Patients for Affordable Drugs, acknowledged in his opening statement that innovation was the only thing keeping him alive, for now. He has multiple myeloma, which is incurable, and he has already relapsed twice. His drugs cost $325,000 a year, he said. “Drugs don’t work if people can’t afford them,” he said.

Chairman Lindsey Graham, R-South Carolina, said at the start of the hearing that “one thing you don’t want to do is kill the goose that laid the golden egg,” referring to drug development, but acknowledged there was bipartisan concern about affordability issues. “I expect us to do something on patents and prescription drug pricing this year,” he said. “I don’t know where the sweet spot is but doing nothing is unacceptable.”

Ranking member Dianne Feinstein, D-California, said she largely agreed with Graham. “For the millions of elderly Americans living on a fixed income, this may mean—does mean—the choice between paying household or other bills and paying for life-saving medication.“

The issue is beyond the concept of there being a solo golden egg, Carrier said. “It is a carton of silver eggs, a carton of bronze eggs, and an entire refrigerated section of cubic zirconia eggs.”

Some of the witnesses agreed on potential remedies, such as The Creating and Restoring Equal Access To Equivalent Samples (CREATES) Act, which would allow a biosimilar or generic developer to bring a civil action against an innovator drug company if the latter refuses to make available enough samples of a product for testing. It would also explicitly empower the FDA to approve alternative Risk Evaluation and Mitigation Strategy, or REMS, programs if a generic or biosimilar developer and the innovator company are unable to arrive at a single shared system.

Others include ending pay for delay deals, ending patent evergreening, ending so-called “sham citizen” petitions to block generic drugs, and fixing inter partes review.

There were some differences, however. For instance, David S. Olson, JD, a professor at Boston College Law School, said the issue affecting pharmaceuticals is not so much patent thickets—he questioned how they are defined, and noted that they are not unique to the drug industry—but rather patent evergreening. Even then, he takes a narrow view of what patent evergreening consists of, saying that it does not include such things as new uses of an existing drug, different formulations, or different manufacturing processes. “It would be a very significant change in patent law to change the law to not allow these kinds of patents in the pharmaceutical field.”

Citing the example of biologic drugs, he said the issue amounts to “occasional temptation” by drug companies that seek overly broad patents and is one that can be limited by attacking the abuse rather than revamping patent law.

PhRMA supports some of the bills that have been proposed to address these issues, but not without modifications or amendments, Stansel said.


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