By Kevin E. Noonan --
For at least a decade, Congress has been concerned (not to say obsessed) with drug costs (understandably so, no matter how ineffectively; see "FTC to the Rescue Regarding High Drug Prices and Patents"; "Even More Ill-Conceived Remedies from Congress Regarding Prescription Drug Costs"; "More Ill-conceived Remedies from Congress Regarding Prescription Drug Costs"; "A Solution in Search of a Problem"; Senate Once Again Tries to Address Drug Pricing). A consequence has been a focus on patents and their contribution to the crisis. Recently, David Gaugh, Interim CEO of the Association for Accessible Medicines (formerly the Generic Pharmaceutical Association) wrote an article entitled "Congress is Ignoring the Best Solution to Reducing Drug Prices" on realclearpolicy.com challenging if not rebutting much of this rhetoric by identifying more relevant sources for increases in drug pricing.
Mr. Gaugh not surprisingly asserts that the only way to reliably reduce drug prices is generic and biosimilar competition. This case can certainly be made for generic drugs, which have an almost 40-year track record leading to the statistic that "generics and biosimilars account for 91% of prescriptions filled in the U.S. but only 18% of prescription spending." But Mr. Gaugh argues that these gains are at risk from problems with sustainability of the generic (and biosimilar) drug industries. As Mr. Gaugh explains, often "the price of generic medicines has fallen to an unsustainably low level, resulting in market exits and creating the optimal conditions for shortages," which shortages are appearing in the aftermath of the economic and supply chain disjunctions caused by the pandemic. (This statement is ironic albeit truthful, because Mr. Gaugh also quotes FDA statistics that generic competition results in "an astounding 95% price drop on a mature market." This suggests that the meme that high prices for branded drugs were solely caused by pharmaceutical company greed was incorrect.)
Even the newer generic and biosimilar drugs are "being squeezed" by "historically slow adoption," Mr. Gaugh writes (although the reasons for this between these classes of drugs are likely not to be the same). With regard to biosimilars, the financial benefits are patent, being "on average more than 50% less than the brand price was when the biosimilar launched" (for drugs that although representing only a fraction of prescriptions, drive almost half of all drug spending) and yet are "woefully underutilized." Mr. Gaugh uses Humira® as an example, which starting July 1st of this year is subject to competition by several biosimilars (see "The New York Times Is at It Again Regarding Patents"). But who will benefit may not be patients; Mr. Gaugh identifies "middlemen" as being able to exact greater rebates from Humira® sales while formularies are expected (by Mr. Gaugh) to "sideline" these biosimilar equivalents.
Mr. Gaugh uses Semglee, the first interchangeable insulin biosimilar, to illustrate the effect of the market and its participants on this failure of biosimilar substitution to reap the benefits promised by passage of the Biologics Price Competition and Innovation Act (BPCIA) as part of Obamacare. According to the article:
Semglee has two different prices, one with a slight decrease in price compared to the brand and a high rebate, and another with a major (65%) decrease in price. Although the lower list price would have translated into lower costs to patients, PBMs have largely stuck with the higher priced brand insulin rather than encouraging use of the lowest list price.
In addition to these economic consequences, Mr. Gaugh also argues that "manufacturing and regulatory challenges, runaway price deflation driven by middlemen market consolidation, and government policies in Medicaid, Medicare and 340B that reduce the financial viability of generic manufacturing."
While conceding that there is no "magic bullet" for correcting (or at least improving) these circumstances, Mr. Gaugh argues that adoption of the following options could provide some solutions:
• Improving FDA internal collaboration between inspectors and its drug shortage staff (DSS) and between the agency and manufacturers working to avoid a shortage,
• Creating a reserve capacity supply of key medicines as well as creating incentives for hospitals to purchase reserve supply at sustainable, long-term fixed price and volume contracts,
• Improving Medicare drug formulary coverage of new generics and biosimilars, and
• Removing financial burdens such as the Medicaid inflation penalty and 340B that make continued production of low-margin generics unsustainable.
Mr. Gaugh concludes his article that both the branded and generic/biosimilar drugs industries are businesses driven by investment and "if government policies continue to penalize low-cost generic medicines and block adoption of new generics and biosimilars" decreased investment may follow. Which of course will just exacerbate high drug prices and increased shortages that burden the health care system.
While the message of Mr. Gaugh's article are anything but hopeful, it was refreshing for a change to have problems with drug pricing in the U.S. not to focus on (or even mention) patents as being the cause. That may be a popular refrain from the media and some politicians (see, e.g., "The New York Times Is at It Again Regarding Patents"; "Faux-Populist Patent Fantasies from The New York Times"; "The More the Merrier: The Journal Joins the Times in Complaining about Patents"; "New York Times to Innovation: Drop Dead"; "Science Fiction in The New York Times") but Mr. Gaugh's assessment provides a welcome, informed alternative to what people think "everybody knows."
Top Stories of 2023: #8 to #10
By Donald Zuhn –-
After reflecting upon the events of the past twelve months, Patent Docs presents its 17th annual list of top patent stories. For 2023, we identified ten stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants. Today, we count down stories #10 to #8, and later this week we will count down the remaining top stories of 2023. As with our other lists (2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look. As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know. In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2023" on January 23, 2024 from 10:00 am to 11:15 am (CT). Details regarding the webinar, which will focus on a few of the most important stories on this year's list, can be found here.
10. Debate on Expansion of COVID Waiver Continues; WHO Releases Draft Agreement on Pandemic Prevention, Preparedness, and Response
The year began with the World Health Organization (WHO) releasing a draft agreement on pandemic prevention, preparedness, and response in February for consideration by the Intergovernmental Negotiating Body (INB), which is comprised of the 194 Member States of the WHO, and which was established in December 2021 at a special session of the WHO's World Health Assembly to draft and negotiate an agreement to strengthen global pandemic prevention, preparedness, and response. The draft includes a 49-clause preamble, with at least ten of the clauses concerning intellectual property. The agreement is expected to be agreed upon by the World Health Assembly in 2024.
And the year ended with the International Trade Commission (ITC) issuing a Report, in response to a request by the U.S. Trade Representative, Ambassador Katherine Tai, in anticipation of negotiations over expansion of the World Trade Organization (WTO) IP waiver that applies to COVID-19 vaccines (but not yet to COVID-19 diagnostics and therapeutic drugs). The mandate from the Trade Representative was that the ITC Report be a product of market and other research within the Commission's expertise and also reflect the views of stakeholders and the public, and that the Report would not have as a goal to "draw any policy conclusions." Despite not drawing any policy conclusions, however, the ITC Report has renewed discussions in some quarters over expansion of the COVID-19 waiver, the deadline of which was extended indefinitely in December 2022 (see "Nine Countries Seek Extension of WTO Waiver to COVID-19 Therapeutics and Diagnostics" and "Top Four Stories of 2022").
For information regarding this and other related topics, please see:
• "International Trade Commission Issues Report of COVID-19 IP Waiver," November 8, 2023
• ""Zero Draft" of WHO CA+ Released," February 7, 2023
9. Supreme Court Declines to Hear Teva Pharmaceuticals v. GlaxoSmithKline
In May, the Supreme Court declined to grant certiorari in Teva Pharmaceuticals USA v. GlaxoSmithKline LLC, disregarding the views of the Solicitor General regarding whether to grant cert. Perhaps the Justices felt that the Federal Circuit's backtracking in its second panel decision on the breadth of infringement inducement set forth in its first decision, in light of then Chief Judge Prost's strong dissent and the firestorm of protest (public and through amicus briefing regarding Teva's petition for rehearing), was enough to cabin the decision to the somewhat unique facts in the case. The petition for cert. involved the Federal Circuit's decisions in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2020) and GlaxoSmithKline LLC v. Teva Pharmaceuticals USA (Fed. Cir. 2021), in both of which former Chief Judge Prost issued strong dissents, and which concerned whether a generic applicant filing a "skinny label" ANDA could properly be found liable for inducing infringement under 35 U.S.C. § 271(b). The Court issued an Order to the Solicitor General soliciting the government's views and that brief advocated that the Court grant cert.
For information regarding this and other related topics, please see:
• "H. Lundbeck A/S v. Lupin Ltd. (Fed. Cir. 2023)*," December 18, 2023
• "Solicitor General Files Brief Advocating Certiorari Grant in Teva Pharmaceuticals v. GlaxoSmithKline; Court Declines Invitation," May 15, 2023
8. Patent Law under Attack (Again)
The New York Times is (in)famous in this space for its attacks on the patent system (see "Top Stories of 2022: #8 to #10"; #9. New York Times Reopens Attack on U.S. Patent System). And last year at this time, the Times was at it again in a front page piece on Humira, a drug used for a variety of ailments that has brought relief to millions of patients who otherwise suffered with earlier, less effective drugs. The "problem" seems to be that Humira has made a pharma company a lot of money (purportedly $116 billion), that the drug is expensive (said to cost upwards of $50,000/year) and that the drug company has amassed a large number of patents to protect its intellectual property. But as we noted in response to the Times article, the bigger problem is that the Times failed to recognize several important facts relating to the circumstances under which Humira's makers made this money and amassed its patent estate (or "thicket" as the anti-patent crowd likes to call it).
In May, the U.S. Senate's Health, Education, Labor & Pensions (HELP) Committee passed out of committee five bills that attempted to address high drug prices: the Ensuring Timely Access to Generics Act of 2023 (S. 1067); the Expanding Access to Low-Cost Generics Act of 2023 (S. 1114); the Retaining Access and Restoring Exclusivity Act (S. 1214); and the Increasing Transparency in Generic Drug Applications Act (S. 775). And in September, a letter from 25 scholars, former judges, and former government officials sent to the Senate Health, Education, Labor and Pensions Committee, the Chair and Ranking Member of the House Ways and Means Committee, and the Secretary of Health and Human Services, Xavier Becerra, intended to "correct[] false claims that the federal government can use [the "march-in rights" provisions of] the Bayh-Dole Act . . . to impose price controls on prescription drugs."
Attacks on the patent system are not confined to an asserted impact of patents on drug pricing, however. Some attacking the patent system are also opposed to software patents, with such opposition seemingly being based on one or more of the false assumptions that all software patents are too broad, that it is obvious to invent software based processes, programming is an administrative activity that does not warrant patent protection, or that the patent system should not protect non-physical inventions. As we noted in July, none of these positions have any legal or technical credibility.
For information regarding this and other related topics, please see:
• "Patent Luminaries Try to Set Congress Straight on Drug Price Controls," September 26, 2023
• "FTC Announces Efforts to Police Pharmaceutical Companies' Patent Behavior," September 19, 2023
• "Drugs May Cost Too Much, But Patents Are Not the Cause," July 18, 2023
• "You Are Going to Hear A Lot More FUD about Patent Law, So Here Are Some Facts," July 5, 2023
• "Senate Once Again Tries to Address Drug Pricing," May 16, 2023
• "The New York Times Is at It Again Regarding Patents," January 29, 2023
Posted at 10:36 PM in International IP, Media Commentary, Supreme Court | Permalink | Comments (0)