Senate Judiciary Committee Approves Modified Drug Patent Measure
July 5, 2019
On May 27, the Senate Judiciary Committee approved four bills with bipartisan support, all aimed at lowering prescription drug costs. Taken together, the bills are intended to curb certain abusive practices by drug patent owners, such as “patent hopping,” and “patent thickets,” which some policymakers believe are being used to extend market exclusivity and block competition from lower cost generics or biosimilars. The package of bills advanced only after changes were made to help mitigate the concerns of key committee members and the pharmaceutical industry that the legislation went too far, and could ultimately have a chilling effect on continued innovation.
As originally drafted, one of these bills, the “Affordable Prescriptions for Patients Act of 2019” (APPA) (S.1416), sponsored by Judiciary Committee Chairman, Senator John Cornyn (R-TX) and Senator Richard Blumenthal (D-CT), would have granted the Federal Trade Commission (FTC) the ability to bring an antitrust action against a drugmaker for filing valid patents on improvements to a product. This version would have greatly reduced the incentive for making any post-approval improvements to a product and exposed manufacturers to significant liability for doing so.
However, as the bill moved through committee, the broad FTC anti-patent authority was struck from the bill and replaced with a change to the “patent dance” under the Biologics Price Competition and Innovation Act (BPCIA). This change limits to 20 the number of patents that can be raised by drug patent owners in litigation under the BPCIA. The cap applies to patents that are filed more than four years after approval of an innovative biologic drug. Importantly, any patent that asserts “a method of using [a biological product] in therapy, diagnosis, or prophylaxis, such as an indication or method of treatment or other condition of use,” would be exempt. Upon a showing of good cause, a drug patent owner may also seek the court’s discretion to increase the number of patents above the cap.
During debate, Chairman Cornyn noted that the legislation would allow biosimilar developers to resolve patent issues faster and focus on those patents that matter the most, increasing drug competition and reducing prices for patients.
In return, biosimilar applicants would have to follow all steps of the “patent dance”— something they currently don’t have to do. While far from perfect, the final legislation reported out of the committee is an improvement over its original version.
Along with the APPA, the Judiciary panel also approved legislation to crack down on manufacturer-backed citizen petitions to the Food and Drug Administration and to authorize the FTC to examine the drug supply chain and provide policy recommendations.
While timing is uncertain, the measure, which could be added to a larger drug pricing proposal, is now poised for further consideration by the full Senate.
Term Descriptions
Patent Dance
The Biologics Price Competition and Innovation Act of 2009 (BPCIA), enacted in March 2010, provides a regulatory pathway for biosimilar products entering the market, which includes a process and schedule for information exchange between a biosimilar applicant and a brandname reference product sponsor (RPS), otherwise known as the “patent dance”. The “patent dance” is intended to resolve potential patent disputes in an orderly and expeditious fashion.
During the “patent dance,” the applicant and RPS identify the patents that could be litigated in the future during two potential phases of litigation. In the first phase, the RPS can allege infringement of a subset of patents identified during the “patent dance”. The second phase begins after the RPS receives the required Notice of Commercial Marketing from the applicant. During this second phase, the RPS can assert any remaining patents that were not included in the first phase.
Patent/Product Hopping
“Patent/Product hopping,” also called “forced switching” or “evergreening,” involves a brand-name company switching the market for a drug, prior to its patent expiration date, to a reformulated version that has a longer patent life, but which offers little or no therapeutic advantages.
Not all reformulations pose competitive concerns. However, this practice, when intended to prevent generic market entry, can result in unjustified monopoly pricing.
Patent Thickets
A “patent thicket” is a concept that describes a dense set of patent rights that a competing drug company must cut through in order to commercialize a new product. The practice is typically used to defend against competitors designing around a single patent. “Patent thickets” can reflect legitimate innovations and improvements to a drug, but can also be used to game the system and impede the entry of a generic drug.