More Ill-conceived Remedies from Congress Regarding Prescription Drug Costs

By Kevin E. Noonan --

A great deal of faith has recently been given to Congress by the patent community, spurred by efforts to solve the conundrums in patent law created by several recent Supreme Court decisions (and aided and abetted by the U.S. Patent and Trademark Office, district courts, and the Federal Circuit).  Last week, Congress provided ample evidence that a degree of caution (if not a grain of salt) should arise regarding anything Congress does with the introduction by Senator Bill Cassidy (R-LA) (along with several "co-conspirators") of three bills ostensibly aimed at "solving" the problem of "excessively high" prescription drug prices.  A gastroenterologist before standing for elective office, Senator Cassidy's sympathies (if not prejudices) are both evident and understandable.  But as policies, they are ill conceived and unlikely to have anything more than a cosmetic effect.

The bill proposing the most extensive changes, entitled "Reforming Evergreening and Manipulation that Extends Drug Years Act'' (or the ''REMEDY Act,'' showing that clever acronyms for legislation is a trope that has outlived whatever cleverness it ever had), would be better called the "Launch at Risk Act."  The changes proposed in Section 505(c)(3)(C) of the Food, Drug, and Cosmetic Act (codified at 21 U.S.C. 355) read as follows (in italics):

If the applicant made a certification described in clause (iv) of subsection (b)(2)(A) [colloquially known as a "Paragraph IV Certification"], the approval shall be made effective immediately unless, in the case of a certification with respect to a patent that claims a drug substance (and not in the case of a certification with respect to a patent that claims a drug product or method of use for a drug, except that, in the case of a patent that claims a drug substance and a drug product or method of use, this subparagraph shall apply, but only to the extent the  patent claims a drug substance), before the expiration of 45 days after the date on which the notice described in subsection (b)(3) is received, an action is brought for infringement of the patent that is the subject of the certification and for which information was submitted to the Secretary under paragraph (2) or subsection (b)(1) before the date on which the application (excluding an amendment or supplement to the application) was submitted.

Also proposed is amendment to Section 505(j)(5)(B)(iii) of the FDCA:

(iii)  If the applicant made a certification described in subclause (IV) of paragraph (2)(A)(vii), the approval shall be made effective immediately unless, in the case of a certification with respect to a patent that claims a drug substance (and not in the case of a certification with respect to a patent that claims a drug product or method of use for a drug, except that, in the case of a patent that claims a drug substance and a drug product or method of use, this clause shall apply, but only to the extent the patent claims a drug substance), before the expiration of 45 days after the date on which the notice described in paragraph (2)(B) is received, an action is brought for infringement of the patent that is the subject of the certification and for which information was submitted to the Secretary under subsection (b)(1) or (c)(2) before the date on which the application (excluding an amendment or supplement to the application), which the Secretary later determines to be substantially complete, was submitted.

If enacted into law, a patent-holding, branded drug maker would only be able to have the benefit of the 30-month stay enshrined in these provisions of the Hatch-Waxman Act for patents claiming a drug substance itself, but not formulations or methods of treatment using a patented, branded drug under an NDA.  An ANDA applicant could have FDA approve its generic drug and to enter the marketplace with no further ado.

Of course, this is the classic "launch at risk" scenario, and the generic drug maker would risk not only an injunction preventing marketing of its generic drug until any patent to formulation or method of treatment has expired, but also treble damages for willful infringement.  This scenario may be much less attractive to actual generic drug companies than Senator Cassidy and his co-sponsors believe it will be.

The bill would also amend Section 505(j)(7)(A) by adding the following language:

(iv) In the case of a listed drug for which the list under clause (i) includes a patent that claims the drug or a use for such drug, and where the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office has cancelled any claim of the patent relating to such drug or such use pursuant to a determination by the Patent Trial and Appeal Board in an inter partes review conducted under chapter 31 of title 35, United States Code, or a post-grant review conducted under chapter 32 of that title, and any such cancellation, if appealed, has been upheld upon appeal, the holder of the applicable approved application shall notify the Secretary of such cancellation, and the revisions required under clause (iii) shall include striking the patent from the list with respect to such drug.

And finally the bill would amend Section 505(j)(5)(B)(iv)(I) regarding the 180-day exclusivity period:

This subclause shall apply even if a patent is stricken from the list under paragraph (7)(A), pursuant to the second sentence of clause (iii) of such paragraph, provided that, at the time that the first applicant submitted an application under this subsection containing a certification described in paragraph (2)(A)(vii)(IV), the patent that was the subject of such certification was included in such list with respect to the listed drug.

These revisions are cosmetic insofar as they merely bring the statute into conformity with the changes proposed for Sections 505(c)(3)(C) and 505(j)(5)(B)(iii) and thus bear little further discussion.

Two other bills have been formally introduced by Senator Cassidy's colleagues joined by him.  One, introduced by Senator Cory Gardner (R-CO) and Jeanne Shaheen (D-NH) and Senator Cassidy, is entitled "Ensuring Timely Access to Generics Act," and proposes changes to Section 505(q)(1) in order enable the Secretary to reject a citizen petition directed merely to delaying generic drug entry:

(E) Denial based on intent to delay

(i) IN GENERAL.—If the Secretary determines that a petition or a supplement to the petition was submitted with the primary purpose of delaying the approval of an application and the petition does not on its face raise valid scientific or regulatory issues, the Secretary may deny the petition at any point based on such determination. The Secretary may issue guidance to describe the factors that will be used to determine under this subparagraph whether a petition is submitted with the primary purpose of delaying the approval of an application.

(ii) FACTORS.—In determining whether a petition was submitted with the primary purpose of delaying the approval of an application, the Secretary shall consider—

(I) whether it appears, based on the date that relevant information relied upon in the petition became known to the petitioner (or reasonably should have been known to the petitioner), as certified by the petitioner in accordance with subparagraph (H), that the petitioner has taken an unreasonable length of time to submit the petition;

(II) whether the petitioner has submitted multiple or serial petitions raising issues that reasonably could have been known to the petitioner at the time of submission of the earlier petition or petitions;

(III) whether the petition was submitted close in time to a known, first date upon which an application under subsection (b)(2) of this section or section 351(k) of the Public Health Service Act could be approved;

(IV) whether the petition was submitted without any data or information in support of the scientific positions set forth in the petition;

(V) whether the petition raises the same or substantially similar issues as a prior petition to which the Secretary has responded substantively already, particularly if the subsequent submission follows the earlier response closely in time;

(VI) whether the petition concerns standards for approval of a drug for which the Secretary has provided an opportunity for public input, such as draft or final product-specific guidance applicable petitioner has not provided comment other than through the petition;

(VII) whether the petition requests that other applicants meet standards for testing, data, or labeling for a drug that are more onerous or rigorous than the standards applicable to, as applicable, the listed drug, reference product, or petitioner's version of the same drug;

(VIII) the history of the petitioner with the Food and Drug Administration, such as whether the petitioner has a history of submitting petitions that the Secretary has determined were submitted with the primary purpose of delay; and

(IX) other relevant considerations, as the Secretary may describe in guidance.''; and

(C) by adding at the end the following:

(iii) PUBLIC AVAILABILITY.—The Secretary shall publish on the internet  website of the Food and Drug Administration a list of any petitions that the Secretary determines were submitted for the primary purpose of delaying the approval of an application.

(iv) REFERRAL TO THE FEDERAL TRADE COMMISSION.—The Secretary shall establish procedures for referring to the Federal Trade Commission any petition or supplement to a petition that the Secretary determines was submitted with the primary purpose of delaying approval of an application. Such procedures shall include notification to the petitioner and an opportunity for the petitioner to respond to the Secretary prior to referral to the Federal Trade Commission.''; and

(2) by adding at the end the following:

(J) TIMELINE FOR SUBMITTING PETITIONS.—The Secretary may establish a time period after the relevant information relied upon in a petition became known to the petitioner (or reasonably should have been known to a petitioner), as certified by the petitioner in accordance with subparagraph (H), and any petition that is submitted after such time period has passed shall be summarily denied.

The bill tracks a draft Guidance released by FDA last year representing the agency's attempt to address the perceived problem with frivolous citizen petitions.  The significance and effect of such changes may depend on how much one considers branded drug makers are filing frivolous citizen petitions (or that they are having substantive effects) and whether the changes would pass constitutional muster on free speech and right to petition the Federal government for redress of grievances grounds.

The other bill, introduced by Senator Tina Smith (D-MN), is entitled the ''Protecting Access to Biosimilars Act" and is directed to changes in the BPCIA under Section 351(k)(7) of the Public Health Service Act (codified at (42 U.S.C. § 262(k)(7)).  The bill proposes these changes to the statutory language:

(D) DEEMED LICENSES.—

(i) NO ADDITIONAL EXCLUSIVITY THROUGH DEEMING.—An approved application that is deemed to be a license for a biological product under this section pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 shall not be treated as having been first licensed under subsection (a) for purposes of subparagraphs (A) and (B).

(ii) LIMITATION ON EXCLUSIVITY APPLIES TO ANY REFERENCE PRODUCT.—

Subparagraph (C) shall apply to any reference product, without regard to whether—

(I) such product was first licensed under subsection (a); or

(II) the approved application for such product was deemed to be a license for a biological product as described in clause (i).

Paradoxically this bill has the highest chance of passage, according to Ryan Davis at IP Law 360 (subscription required) as being directed to insulin, which has been licensed under the FDCA since the 1930's but is slated to come under the auspices of the BPCIA in 2020.  According to Mr. Davis, this bill is intended to prevent this change from bestowing on a biologic drug-classified insulins a 12-year exclusivity under the BPCIA.  As with the Timely Act, the effect enactment of this bill into law would have depends on the magnitude of the problem that prompted its introduction.

As has been said in other contexts, political posturing is in vogue and particularly posturing regarding prescription drug prices.  It is unclear whether any of these proposed changes in the law will remedy any real problems that underlie high drug prices.  Bills like these only address part of those problems but at the cost of addressing systemic issues with drug pricing not as amenable to quick or simple changes in existing law.

Comments

[Atari Man]

The introduction of this bill by a gastroenterologist supports my contention that the vast majority of physicians are overpaid plumbers.

[Greg DeLassus]

I see that Robin Feldman has been making the rounds lately (URL below), arguing for changes in how patents work in the pharma industry. It is worth noting, however, that the patent laws apply exactly the same to pharma as they do to (e.g.) electronics, or aseptically packaged food, or household insulation, etc. Nevertheless, pharma prices keep rising faster than inflation, while the prices in those other industries do not.

To my mind, this implies that patents are not the cause of the cost growth. Trying to tackle pharma price growth, therefore, by fiddling with patent law seems to me like trying to steer the car away from an obstacle by sharply turning the volume knob on the radio.

*If* this really is a problem that needs fixing, then the experts would do better to look for solutions in FDA law. Patent law is not the problem.

https://www.bloomberg.com/opinion/articles/2019-04-08/why-drug-prices-keep-rising-despite-congress-s-efforts

[Skeptical]

Nice analogy, Mr. DeLassus.

Versions of that can be made to apply almost universally to the entire post-grant mechanisms of the AIA, as such have been entirely NOT aligned with any actual measure of EXAMINATION QUALITY on the front end of the patent grant.

Creating a case that is even worse then "just a band-aid," the AIA (along with Court actions) have basically gutted the value of MOST ALL patents in order to wipe out a common cold symptom.

[Atari Man]

Who said that post-grant mechanisms such of those of the AIA are meant to "align" (whatever that means) with pre-grant examination?

The PTO has more work than it can handle, it is impossible for the PTO to do as good a job of examining against that which is already known in comparison to the job that will be done by an interested party whose commercial operations are threatened by a patent. There are different ways one can conceive of allowing third parties to be involved in the examination of patents (pre- or post-grant), but that involvement per se is not necessarily a bad thing.

I think the AIA post-grant mechanisms are lacking, particularly following the supreme court's flatulence known as alice/mayo/myriad, but to continue to expect the that PTO examining corps by itself is capable, let alone will, do a good job of examining all the applications before it is to be as blinded to reality as those robed rogues who issued the aforementioned trilogy.

[Atari Man]

Greg, excellent point.

[Greg DeLassus]

"[T]he patent laws apply exactly the same to pharma as they do to (e.g.) electronics, or aseptically packaged food, or household "insulation, etc. Nevertheless, pharma prices keep rising faster than inflation, while the prices in those other industries do not."

Similarly, pharmaceuticals without patent protection (such as the celebrated example of Daraprim) show at least as much faster-than-inflation price growth as patented pharmaceuticals. Once again, this evidence suggests that whatever is causing this price growth, it is not the patent law.

Hunting around for patent law solutions is not going to be productive if patent law is not the problem. Better to look to FDA law for the solution to this problem.

[Skeptical]

Atari Man,

There is more than just a little problem with pretending that an actual patent grant is MEANINGLESS in order to obtain "real examination by interested parties that the Patent Office fails to do (for whatever reason)."