Congress’ Think Tank Digs Into Drug Patenting Practices

February 13, 2020 - A new Congressional Research Service report on Wednesday delved into the deluge of proposals that have been set forth to address drug pricing and drug patenting practices.

The report is a high-level overview of selected proposals, ranging from legislation to academic literature, intended to tackle ongoing issues around drug parenting practices. These practices have come under scrutiny as of late, with a debate over their impact on drug prices. 

CRS explores the ongoing debate over the alleged anti-competitive patenting practices after the body of proposals for reform increased last year. Patenting practices “take place against a backdrop of a broader public policy debate over drug pricing,” Congress' think tank notes.  

Proposals seek to curb patenting practices by reducing their effectiveness or outlawing them. 

Patenting practices are typically justified as necessary to allow drug manufacturers to make up for their investments in research, development, and approval. A product can have exclusive rights under IP law lasting several months, during which time a rights holder like a brand name drug manufacturer can leverage to potentially charge prices deemed higher-than-competitive. 

READ MORE: FDA, FTC Join Forces on Biologics Competition

“If rights holders are able to charge such prices, they have an incentive to lengthen the period of exclusive rights as much as possible,” CRS says. Critics allege that drug manufacturers “have engaged in patenting practices that unduly extend the period of exclusivity" and that these practices “are used to keep drug prices high, without any benefit for consumers or innovation.”

Selected proposals aim to address four pharmaceutical patenting practices. These include evergreening of patents, product hopping, patent thickets, as well as pay-for-delay settlements. Critics have centered arguments on these four pharmaceutical patenting practices. 

Brand-name drug manufacturers practice so-called patent evergreening, which can hinder generic and biosimilar competition. Modifying the original product by obtaining additional approvals or patents can extend the duration of an exclusive ability to market a product version.

Evergreening is not statutorily forbidden, per se. Yet the inter partes review is intended to serve as a fast and affordable method to challenge patents, particularly when compared to court litigation. The US Patent and Appeal Board upheld Biogen’s Tecfidera patent validity last week. 

The report explores how pharmaceutical patenting practices would change if the proposed bills are enacted within the context of the debate between manufacturers, with generic and biosimilar manufacturers being the critics while brand-name manufacturers playing the defenders' role. 

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“Critics argue that some brand-name drug and biological product manufacturers (the brands) use patenting strategies to ‘game the patent system’ to maximize profits and forestall competition from generic drug or biosimilar manufacturers (the generics),” CRS notes. “Others reject this charge, contending that these practices are a legitimate use of the patent system and are necessary to incentivize the billions of dollars in R&D that lead to new, life-saving drugs.”

Anti-evergreening proposals largely aim to make it harder for companies to meet requirements of later-filed or secondary patents, reduce the impact of later-filed patents, and increase patent examination resources. Other proposals focus on creating incentives to challenge drug patents. 

Critics argue that “by obtaining secondary patents on improvements or ancillary aspects of a pharmaceutical product, manufacturers effectively extend patent protection beyond the term set by Congress,” with the response being that the term is “inherently pejorative” as “it creates the impression that pharmaceutical companies are exploiting the patent system, CRS explains. 

CRS cites the Second Look at Drugs Patents Act of 2019—aimed at encouraging administrative challenges to patents in the US Food and Drug Administration's Orange Book—as an example. 

Yet the STRONGER Patent Act “would shift patent law further away from center to the detriment of American consumers" and “make it extremely difficult to challenge competition-stifling patent thickets in a cost-effective and efficient manner,” the Association for Accessible Medicines says.

READ MORE: Drug Price Hikes Undeterred Despite Legislative Proposals

The report also digs into the Affordable Prescriptions for Patients Act of 2019, which would create a product hopping an antitrust violation and set a cap on the number of certain patents asserted in biologics litigation, to discuss both product hopping and patent thickets. AAM supports APPA to address both as significant obstacles to generic and biosimilar competition.

CRS clarifies that the review evaluates the merits of the proposals. “Instead, the proposals are reviewed as representative examples of the various types of legal changes under consideration.” Other proposed bills would limit the availability of the Hatch-Waxman amendments’ 30-month stay, increase biologic patent transparency, and reform pay-for-delay settlements. The latter will undergo review under a new FDA-FTC joint initiative to foster biologics competition.