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IP Law vs. Drug Prices – Round Two, Fight!

By: Nicholas Bonds, Esq.

Health and Human Services (HHS) Secretary Alex Azar’s recent rule requiring drug manufacturers to include the list prices of their drugs in their television ads is being received by big voices in the industry with about as much enthusiasm as you might expect. Although the rule will not take effect until July 9, big-name manufacturers Merck, Eli Lilly, and Amgen, with the Association of National Advertisers in their corner, are suing HHS and Secretary Azar to block the policy on a combination of likelihood of confusion and First Amendment grounds. Lawsuit aside, the HHS rule drew heavy inspiration from trademark law for its design, and the Federal Government continues to look towards the intellectual property framework for ideas to drag drug prices out of the stratosphere.

Representative Elijah Cummings, Chairman of the Committee on Oversight and Reform, has been among those in Congress leading the charge in this battle over drug prices. Representative Cummings and Senator Debbie Stabenow have joined forces to enlist the Government Accountability Office (GAO) to review HHS’s system for managing patent licenses, with a special focus on Gilead Science’s HIV pill. The drug manufacturer relied, to an extent, on taxpayer-funded research to invent this drug, and are now charging rates that puts it out of reach for many desperate patients. Lawmakers like Cummings and Stabenow believe HHS could better enforce the government’s rights to royalties and licenses, and should take pricing into account when granting such valuable licenses.  

Meanwhile, Senators John Cornyn and Richard Blumenthal have introduced the Affordable Prescriptions for Patients (APP) Act, which is designed to empower the Federal Trade Commission to challenge the anti-competitive nature of patent thickets using its antitrust authority. These thickets encircle drugs like Humira and Lantus with dozens of overlapping patents, effectively foreclosing the possibility of generics or biosimilars from giving consumers cheaper alternatives. The bill also takes aim at the practice of pharmaceutical “product hopping,” a practice similarly designed with an eye toward keeping generics out of the market. By tweaking the absorption rate or dosage level of a drug, manufacturers can take advantage of state substitution laws that prohibit pharmacists from offering a generic if the drug is not bioequivalent or therapeutically equivalent. The AAP would deem both patent thicketing and product hopping to be anticompetitive behavior, and could have sweeping implications for patent prosecution and enforcement.

Some lawmakers, however, have jumped in the trenches alongside the pharmaceutical industry and are actively fighting to loosen requirements for securing patents. Senators Thom Tillis and Chris Coons have written a bill, to big pharma’s delight, that would amend Section 101 of the Patent Act to allow patents on products and laws of nature, abstract ides, and other areas of general knowledge – all areas the Supreme Court has previously ruled ineligible for patent protection under the current wording of the Patent Act.

Most on Capitol Hill agree: the drug prices are too damn high. IP law is indelibly embroiled in the battle to bring these prices down, and combatants on both sides are turning to the IP well for any tactical advantage they can find.