Later this week, the Senate Judiciary Committee is expected to markup several pieces of legislation related to pharmaceutical patents.
During this markup, it is likely that two pieces of legislation would be considered that will badly damage the U.S. system of property rights and medical innovation.
The first piece of legislation, the “Affordable Prescriptions for Patients Act,” would create unintended consequences to the development of new medicines and the patent system broadly. The legislation as introduced on May 9, 2019 creates two new terms – product hopping and patent thicketing.
These terms were defined so broadly under the legislation that they would impact innovators that play by the rules, not just bad actors:
- “Product hopping” is defined as attempts to block generic entry through the creation of new healthcare delivery efficiencies. However, in many cases, these efficiencies create substantial value to patients that improve quality of life, are more convenient or efficient to administer, or come with fewer side effects. They are not intended in any way to block generic competition. Moreover, new innovations do not extend the patent protection for the original product.
- “Patent thicketing” is defined as efforts by manufacturers to obtain multiple patents in order to create long-term monopolies. This definition is so broad that it ignores the need of manufacturers to protect their innovations with patents. In addition, patents are not given out freely – they are granted by the U.S. Patent and Trademark Office for novel and non-obvious inventions. In addition, patents only provide a right to the claimed invention and once it expires, generic competition can enter the market.
Recent media reports indicate that the bill’s sponsor Senator John Cornyn (R-Texas) is revising the legislation to more narrowly target bad actors and protect innovators that are playing by the rules.
According to Bloomberg, the new version may narrow the existing vague standards in order to curb unnecessary lawsuits and may give the Food and Drug Administration, rather than the Federal Trade Commission, jurisdiction over enforcement.
This is a positive development and Senator Cornyn should be commended for his willingness to carefully consider this complex issue.
It is also expected that the “No Combination Drug Patents Act,” introduced by Senator Lindsay Graham (R-SC), will be considered during the markup. This legislation should be rejected.
Like the Cornyn legislation, this proposal would attempt to curb so-called patent thicketing. This legislation creates a “presumption of obviousness” for new innovations (a new dosage, method of administration, or formulation) to an existing drug or biologic.
This would presume certain new innovations as obvious meaning the patent is not valid. Patents for new improvements such as allowing a medicine to be taken orally instead of injected, or a new version of the drug that may reduce side effects would be denied under this standard.
It is important to note that where a new innovation qualifies for patent protection, there is no prolonged patent life for the old version and generic entry into the market place is unaffected by the improvement.
While new innovations improve quality of life for patients, the legislation provides no allowance for patent protection.
It is also unclear how this presumption would be enforced or how an innovator could challenge the presumption.
Patents play an important role in the healthcare system and should be protected. Developing new medicines is a costly and uncertain process and the patent protection system is key to ensuring that costs can be recouped and risks can be taken.
Patents are not absolute – while they prevent competitors from bringing an exact duplicate to market, they do nothing to prevent the development of similar medicines. In fact, there are numerous cases of strong competition between different products designed to treat the same disease.
The strong patent system is why the U.S. is a world leader in medical innovation. This benefits the entire country – more than 4.7 million jobs and $1.3 trillion in economic output is supported directly or indirectly by the pharmaceutical industry.
Disincentivizing medical innovation could lead to long-term shortages, increase costs to the healthcare system, and harm the development of the next generation of medicines including biologics. As lawmakers consider legislation reforming the patent system, they should be sure to consider the immediate and long-term damage these reforms could have on the U.S. patent system.