Congress Can Reduce Drug Costs by Stopping Big Pharma’s Patent Abuse

While the country seems divided on most major issues these days, the overwhelming majority of Americans agree that prescription drugs are far too expensive. In fact, Americans often pay up to 65 percent more than citizens of other Western countries for the exact same prescription drugs. This disparity is in no small part thanks to the exploitative behavior of Big Pharma, which has left many American families unable to afford the often lifesaving medication they desperately need.

Prioritizing profits over patient health, Big Pharma routinely raises the prices for medication while simultaneously preventing more affordable options like generic versions from reaching patients. The Food and Drug Administration (FDA) estimates that generic competition shrinks the cost to just 20 percent of Big Pharma’s sticker prices on average. In total, generics saved American consumers $265 billion in 2017.

Soaring drug costs impact more than just the patients who take medications. It raises insurance premiums for everyone. Blue Cross Blue Shield has said they spend more on the cost of prescription drugs than any other part of their business and is the single greatest reason for rising health insurance premiums.

Despite the harm to patients and rising healthcare insurance costs to healthy consumers, many drug companies are manipulating shortcomings in the patent system to stop generic drugs from reaching the market. Brand name companies game the system’s loopholes by using bad faith tactics like product hopping and patent thickets.

Product hopping abuses our patent and regulatory system to prevent pharmacists from giving patients cheaper generics by making small changes to their more expensive brand drug and encouraging patients to switch to this newer version before the cheaper generic can get approved. Pharmacists can only offer their customers a low-cost generic option if it is exactly the same. The company Indivior used product hopping to maintain their monopoly on a vital medication for treating opioid addiction, called Suboxone. They even patented their changes. According to federal prosecutors now suing Indivior, the company made their prescription drug less safe by increasing risk to children so the company could continue to profit off their monopoly.

Another tactic deployed by Big Pharma’s legal teams is the creation of “patent thickets” which allow a major drug company to file patents upon patents for a single prescription drug, adding years and even decades to their monopolies. Many of these patents are invalid, but it can be too expensive to challenge big patent portfolios. Because of patent thickets, AbbVie has been able to maintain a monopoly on its arthritis drug, Humira, earning $583 every second the company maintains its monopoly in keeping a more affordable generic version off the market.

Former FDA Commissioner Dr. Scott Gottlieb was justifiably concerned with these tactics and told the brand name drug companies to “end the shenanigans.”

Unfortunately, Big Pharma companies engage in their shenanigans to this day, continuing to contribute to the skyrocketing cost of prescription drugs. By preventing consumers from accessing the savings they are supposed to have once the initial patent on medication has expired, Big Pharma is abusing the patent system.

The good news is that the U.S. Senate has begun to take steps toward reining in the drug companies.

On May 7, the Senate Judiciary Committee held a hearing on the impact of patents on the price of prescription drugs. The hearing made painfully clear that the status quo is unacceptable. Members of both parties grilled the representative from Big Pharma and affirmed their bipartisan support for changes that would prevent patent abuse and make prescription drugs more affordable for all Americans. We applaud committee members for shining an overdue light on Big Pharma’s abuse of the patent system.

Coming out of the hearing, the Senate is taking action. On May 9, Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT) introduced the bipartisan Affordable Prescriptions for Patients Act of 2019.  This bill directly addresses the product hopping and patent thicket tactics that Big Pharma uses to exploit the patent system. It is an important step in the right direction and Senators Cornyn and Blumenthal should be applauded for their bipartisan leadership on this issue. The next step must be to examine whether we need changes to the patent system, which has allowed Big Pharma to hold back price competition for important drugs for decades.

For far too long, Big Pharma has exploited patients by charging exorbitant prices for brand name medicine and preventing more affordable generics from entering the market. It is time for change.

Matthew Lane is the Executive Director of the Coalition Against Patent Abuse.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Morning Consult