“This was a bad idea two years ago ,but it’s an even worse idea after seeing what [FTC Chair] Lina Khan has attempted to do with the FTC. Giving that agency even more power is the last thing this congress should do.” – Senator Mike Lee
On Thursday, the Senate Judiciary Committee passed a number of bills targeting the pharmaceutical industry. The bills passed on a bipartisan basis and with minimal discussion, by a voice vote, though Senator Mike Lee (R-UT) reiterated concerns he has had since the bills’ introduction. Here is a recap of what the bills aim to do.
The Preserving Access to Affordable Generics and Biosimilars Act targets the controversial pharmaceutical industry practice of paying generic drug makers to delay their entry into the market. The bill would prohibit such deals and presume them to be anti-competitive unless the parties can prove otherwise. Senator Amy Klobuchar (D-MN), who co-sponsored the bill with Senator Chuck Grassley (R-IA), explained during a committee meeting held in 2021 that the bill would strengthen the Federal Trade Commission’s (FTC’s) ability to challenge these agreements in court and that it strikes the right balance by allowing companies to still pursue agreements that do not harm competition. “The bill narrowly targets the type of settlement agreements that raise serious competitive concerns,” Klobuchar said.
Senator Lee raised some concerns about the bill in that initial meeting, as well as yesterday, noting that the balance struck by the Supreme Court in FTC v. Actavis, Inc., 570 U.S. 136 (2013) seems to be working and that “fundamentally changing the underlying legal standards of the FTC’s current approach, as this bill appears to do, could risk upsetting the successful balance that we’ve struck between innovation and competition in the wake of the Actavis decision.” While Actavis acknowledged that pay for delay settlements could in fact violate antitrust laws, it said the rule of reason should apply in making this determination. Klobuchar’s bill, on the other hand, “creates a presumption that a company has unlawfully compensated a generic or a biosimilar to delay bringing the product to market if certain basic criteria are met.” Lee thus offered a solution in the form of an amendment to change the evidentiary standard from a requirement for a showing of clear and convincing evidence to a preponderance of the evidence standard, but that was not approved.
Lee also noted during yesterday’s vote that “the FTC already investigates and prosecutes” the harms addressed by many of the bills and that, coupled with the recent Inflation Reduction Act price caps on a wide array of drugs, which he called “a big mistake,” they would only add more uncertainty.
The Stop STALLING (“Stop Significant and Time-wasting Abuse Limiting Legitimate Innovation of New Generics”) Act would enable the Federal Trade Commission (FTC) to deter abuse of the Food and Drug Administration’s (FDA’s) citizen petition process by enabling the Commission to seek civil penalties. “Brand name companies and allies have been filing sham petitions raising dubious claims to stall entry of generics,” Senator Dick Durbin (D-IL) said at last year’s meeting on the bill. He cited one finding that brand firms filed 92% of “citizen petitions,” a procedure meant to allow citizens and companies to petition for changes to health policy. Klobuchar, the bill’s sponsor, said that the legislation is “a narrowly tailored solution that will deter companies from engaging in this sham petitioning activity”, which is “a waste of FDA resources at a time when they should be using their resources to approve new drugs and help people who are sick get better.”
The Prescription Pricing for the People Act directs the FTC to issue a report on the pharmaceutical supply chain and whether pharmacy benefit managers (PBMs)—the three biggest of which are CVS, Express Scripts, and UnitedHealth’s Optum—are engaged in anti-competitive behavior that raises consumer cost. Pharmaceutical companies have pointed to PBMs as part of the problem, as they tend to favor higher priced drugs with bigger rebates, and don’t always pass the rebates they’re given on to insurers, for example. The bill would also direct the FTC to make policy recommendations based on their findings.
The Affordable Prescriptions for Patients Act would empower the FTC to curtail drug “product-hopping.” Durbin explained that “this is an anti-competitive practice where brand manufacturers seek to extend their market exclusivity on an expiring patented drug by switching doctors and patients form an old version to a slightly modified new version – think Claritin D.” The bill would also amend the process for resolving patent infringement claims for biologic products, “known as ‘the patent dance,’” and would put a reasonable limit on the number of patents a biologic company can assert in an infringement action to block entry of a biosimilar competitor.
The bill’s sponsor, Senator John Cornyn (R-TX), in a 2021 meeting pointed to the example of Humira, noting that, while the drug is the subject of more than 120 different patents in America, in Europe patients have access to five different competitors since 2018.
Cornyn commented yesterday that, while he has “long been a defender and advocate for IP protection because it does incentivize people to create new life saving drugs in this instance,” –what he and Blumenthal are attempting to do is eliminate gamesmanship.
The Interagency Patent Coordination and Improvement Act of 2023, along the lines of other recent USPTO efforts to coordinate more with the FDA, would establish an interagency task force between the USPTO and the FDA “for purposes of sharing information and providing technical assistance with respect to patents.” The bill was introduced by Senators Durbin and Thom Tillis (R-NC) and is cosponsored by Senators Grassley, Coons, Welch, and Feinstein.
Senator Chris Coons (D-DE), who has been active on IP issues for years, upon consideration of many of the bills in 2021 echoed Lee’s warnings about targeting bad actors at the expense of innovation:
“I agree with the general proposition across these four bills… But I also am concerned that we continue to protect the patent system itself, this constitutionally created property right that I think is critical to innovation and our competitiveness globally. Overly aggressive use of the tools created in this legislation could sweep up good actors as well as bad actors and could have unintended negative consequences, and I look forward to working with the co-sponsors to avoid that.”
Mazie Hirono (D-HI), who also is active on IP issues, echoed Coons at the time:
“The patent system is very complicated and every time we make a change to the patent system it can lead to unintended consequences. The effect could be to reduce the incentive to innovate and invent the next generation of better, safer drugs.”
Lee made it clear yesterday that he would not support passage of the bills without “substantial revisions” but allowed them to clear the committee in the interest of working with the co-sponsors to do so. He also lamented aspects of some of the bills that would grant more authority to the FTC. He remarked: “This was a bad idea two years ago ,but it’s an even worse idea after seeing what Lina Khan has attempted to do with the FTC. Giving that agency even more power is the last thing this congress should do. I can’t support their passage until there are substantial revisions to prevent FTC overreach and unintended harm to consumers.”
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