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June 27, 2019 03:41 PM

Senate panel approves modified pharma patent restraints

Susannah Luthi
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    The Senate Judiciary Committee on Thursday approved a drug-pricing proposal that had rattled manufacturers by reining in patent practices, but only after pharma pressure watered the bill down.

    The bill by Sens. John Cornyn (R-Texas) and Richard Blumenthal (D-Conn.) would give the Federal Trade Commission legal grounds to fight patent-abuse tactics known as "product hopping" and "patent thickets." Those practices entail using minor reformulations or dozens of patents so that companies can avoid generic competition and extend a pricey drug's exclusivity.

    But for Sens. Thom Tillis (R-N.C.) and Chris Coons (D-Del.), Cornyn's initial effort went too far and painted with too wide a brush. They demanded changes in order to move the bill through the Judiciary Committee.

    Tillis' and Coons' concerns led to revising the language so that the bill applies to specifically anticompetitive behavior. One significant addition to the patent thickets provision would let manufacturers secure up to 20 patents for innovative changes to a drug without getting scrutiny.

    Cornyn described his amended bill as focusing "only on bad actors and not the innovators."

    The split in the committee over his original effort represented for one pharmaceutical lobbyist a fundamental problem in Congress' drive for substantive reform.

    "There are the AbbVies, Amgens, PhRMA and BIO that want to ramp up patent protections for folks, and Cornyn is taking the opposite tack," said the lobbyist, who spoke on condition of anonymity. "He's starting to ask the fundamental question: when is enough patent protection enough? And he's drawn a line, and he deserves a lot of credit for that."

    The other side, the lobbyist continued, is pushing the familiar pharma emphasis on the value of innovation and how they need more patent protections.

    "What's very clear to me is there was a lesson learned in the 2018 midterms on which side of pharma it pays to be on," the lobbyist added. "Tillis learned one lesson; Cornyn came down on the other side."

    Coons told reporters he was concerned Cornyn's first draft was "overly broad and could have had unintended consequences."

    "Look, this is a process that happens in every piece of legislation," he said of the committee's debate. "When it's first drafted it goes in a certain direction and then requires some conversation and revision to get to a place where it can make it out of committee."

    For his part, Tillis described the compromise as progress "on both sides of the issue."

    "I think that when there is a legitimate pattern of abuse you fix it. But I'm not one to paint the entire industry with a broad swath, not because I necessarily favor the industry, but because of the chilling effect it could have on innovation and investment," Tillis said.

    But for the pharmaceutical lobbyist, the new bill's 20-patent cap and the compromise language offers wiggle room for clever lawyers to hold back certain patents that could lead to legal scrutiny. If the goal is to really "prune" thickets, he added, lawmakers could clarify the precise patents that would fall under the cap.

    The cap doesn't necessarily simplify legal challenges either. For example, the Pfizer and Teva lawsuit brought against Genentech over the chemotherapy drug Herceptin was limited to just 10 patents and 20 claims. Amgen's lawsuit against Genentech over Avastin was kept to just eight patents.

    Cornyn has been outspoken in his fight against patent abuses. His original legislation came a few months after the senator confronted AbbVie CEO Michael Gonzales about Humira's 136 patents, which have secured the blockbuster drug's 20-year exclusivity period. This happened at a high-profile Senate Finance Committee hearing with top pharmaceutical executives.

    Three June hearings in the intellectual property subcommittee led by Tillis and Coons heard testimony from a slate of manufacturers including Johnson & Johnson and Genentech.

    Last week as trouble mounted in the committee over his bill, Cornyn spoke to the Senate health committee about whether he could move the legislation to its jurisdiction. That didn't work out either, but a compromise was struck earlier this week to keep the bill moving.

    Along with the Cornyn-Blumenthal bill, the Judiciary panel also approved measures to crack down on manufacturer-backed citizen petitions to the Food and Drug Administration and to authorize the FTC to scrutinize the entire drug supply chain and make policy recommendations. Both of these bills passed unanimously.

    A separate proposal, intended to ban manufacturers from transferring patent ownership to Native American tribes to gain sovereign immunity, passed with only Republican votes, with Democrats expressing concerns that it would override tribal sovereign immunity.

    This legislation follows on the heels of the major healthcare package from the Senate health committee. The Senate Finance Committee has yet to unveil its own expected proposals on drug pricing, as negotiations continue between the committee leaders.

    House Democrats are also working on a major effort to allow for drug price negotiation, although after months of work by staffers for House Speaker Nancy Pelosi (D-Calif.) details are still unclear. Rep. Mark Pocan (D-Wis.), who co-chairs the Congressional Progressive Caucus, said he plans to sit down with the chairs of the House Ways and Means and Energy and Commerce committees. He said he understands they have been tasked with drafting legislation.

    "It's an important issue; everything I hear is that things keep moving," Pocan said.

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