Panel Examines Patent Abuse and How It Contributes to Rising Drug Prices

This morning, the Bipartisan Policy Center held a forum called "Examining Pharmaceutical Patent Practices & Their Impact on Drug Prices." Over a two hour session, administrative officials and experts examined patents, exploitation of loopholes by drug companies, and how this contributes to higher drug prices. Several professors offered suggestions on how to fix this problem and bring down drug costs.

The first panel had Dr. Avik Roy, along with Marcus Meier, Acting Director of the Federal Trade Commission's (FTC) Bureau of Competition, and Drew Hirshfeld, Commissioner of Patents for the Patent and Trademark Office (PTO).

Meier opened by observing that Article 1, Section 8 of the Constitution provided for patents, and it should not be taken lightly. Incentives to promote innovation are vital, especially in the pharmaceutical sector. He said that most people think of the FTC as an antitrust watchdog, but it is really a law enforcement agency intended to promote markets and competition. If needed it can investigate and prosecute anticompetitive behavior. Meier proudly pointed to the FTC's work against cases when branded drug companies have paid generic companies not to bring drugs to market (commonly known as pay for delay cases) and a case when AbbVie attempted to use a patent to keep out a generic company.

Hirshfeld told the audience that the PTO orders its examiners to apply the statutes and to avoid making judgements as much as possible. Both he and Meier defended their records in the face of criticism. Meier acknowledged that patents can be used to slow down competition, but said that the idea the patent thickets "doesn't have a glorious history...If someone legitimately gets 150 patents and uses them in a legitimate way, that's not a case where antitrust should take action." The FTC has to judge where it spends its resources and takes cases it thinks it has a chance of winning.

The second panel, by contrast, was far more critical of patent abuse and other harmful practices. It included Professors Robin Feldman and Michael Carrier, who have written extensively on how patent abuse and other anticompetitive tactics stifle innovation and increase drug prices.

Feldman spoke about a recent study she conducted; she found that 78% of drugs coming onto the market with new patents were not actually new drugs but modifications of old ones. This is astonishing. "We want protection for original ideas," she said. Instead we are getting small changes to prolong exclusivity. Carrier agreed, pointing out that brand companies often make switches or tiny changes to drugs just to keep generics off the market.

He also argued for citizen petition reform. Right now, 92% of citizen petitions to the Food and Drug Administration expressing concerns about generic drugs are filed by brand companies, and their only purpose is to block and delay generics. The FDA denies most of them and has asked Congress to pass reforms to stop this abuse.

Finally, the panelists said that PTO examiners don't get enough time to review patents. On average they get nineteen hours per application, and the PTO needs to give them a longer period to review the applications.

Patent abuse that increases drug prices is a growing problem. Fortunately aware of the issue is growing as well.