Democrats ramp up patent fight with drug industry in bid to lower prices (2024)

Democrats have hit on a new tactic in their long battle with drug companies: challenge patents that they say are deliberate attempts to game the system and box out low-cost, generic competitors.

Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) this week wrote to eight pharmaceutical company CEOs, urging them to remove 130 patents from a key federal registry, according to letters shared with The Washington Post. The Democrats are targeting Novo Nordisk, including some of its patents related to expensive drug Ozempic; GlaxoSmithKline; and other companies that produce asthma and diabetes medications.

The 130 patents are among more than 300 patents that the Federal Trade Commission in April identified as “junk patent listings” that should be removed from the registry and are blocking competitors from producing cheaper alternatives. Monday is the deadline for the companies to remove the patents or reaffirm that they believe the patents are legal, according to a person who spoke on the condition of anonymity to detail the private enforcement process.

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The effort comes several months after the FTC and a group of senators, led by Sen. Bernie Sanders (I-Vt.), similarly pressured pharmaceutical companies to take down patents on their asthma inhalers and other products. Three of those companies pledged to cut out-of-pocket costs for millions of Americans who rely on the companies’ devices to help them breathe.

FTC Chair Lina Khan and Democrats in Congress say they are looking for more opportunities to apply the strategy. In many cases, pharmaceutical companies have made small changes to years-old products, such as altering the dosage schedule or tweaking the design of an injector pen, that enable them to file new patents that preserve intellectual property protections for years to come.

“It’s part of President Biden’s efforts to use every tool in the toolbox to lower drug costs for Americans,” Warren said in an interview Thursday. “Congress has a role to play here, both in oversight … and to improve the rules so that Big Pharma can’t manipulate the system so aggressively.”

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The pharmaceutical industry has dismissed Democrats’ challenges as political grandstanding, warning that a patent crackdown could scare investors and companies away from developing medicines, and urging them to pick new targets.

“This is yet another example of policymakers failing to address the real challenges impacting patients,” Cat Hill, a spokeswoman for industry trade group PhRMA, said in a statement. Hill instead blamed industry middlemen known as pharmacy benefit managers and insurers, rather than patents, for “blocking competition and driving up costs.”

Some companies also have signaled they will not bow to Democrats’ pressure. A spokeswoman for GlaxoSmithKline, which has been twice targeted by the FTC and congressional Democrats, said the company believes the patents identified by the FTC in April “are appropriate and in compliance with applicable law, regulations and guidance” and declined to answer whether the company would take them down.

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“We take our regulatory obligations seriously and we do not list patents to prevent legitimate and lawful competition of any kind,” GlaxoSmithKline spokeswoman Kathleen K. Quinn wrote in an email, adding that the company stands behind its intellectual property. “These innovations have allowed GSK to provide and improve life changing treatments for patients suffering from severe respiratory conditions.”

Novo Nordisk and Sanders have been locked in a fight that has made front-page news in Denmark, where the nation’s economy has been boosted by the Danish pharmaceutical company’s sales of Ozempic, which is often prescribed off-label for weight loss, and weight-loss drug Wegovy. Sanders has launched an investigation into the company, using the same tactics that helped win inhaler price cuts, and warned that if Novo Nordisk does not curb prices on its weight-loss drugs, the U.S. health system could soon be “bankrupted” by hundreds of billions of dollars in additional annual spending.

Novo Nordisk has said it will work with lawmakers but has not committed to lowering the drugs’ prices or removing its patents.

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“The allegation that we use this listing to keep prices artificially high is simply false,” spokeswoman Allison Schneider wrote in an email. “Novo takes its regulatory obligations very seriously for all its products and patenting activities.”

Today, I wrote an op-ed on the front page of Danish paper Politiken to appeal to Denmark’s longstanding commitment to social justice and to win their help in urging Novo Nordisk, the most profitable company in Denmark, to reduce the outrageous price of Ozempic & Wegovy in the US. pic.twitter.com/U5usIgHc0X

— Bernie Sanders (@SenSanders) May 13, 2024

Democrats have long fought the pharmaceutical industry, accusing drug companies of wrongly inflating their prices and urging them to find ways to make medicines less expensive — a sentiment shared by many Americans. About 8 in 10 adults believe that prescription drug prices are too high, according to July 2023 polling by KFF, a nonpartisan think tank; a similar proportion blamed pharmaceutical companies for profit-seeking behavior.

The Biden administration and its allies in Congress celebrated a breakthrough in 2022, with passage of the Inflation Reduction Act. The law includes provisions to cap older Americans’ out-of-pocket spending on drugs, and to use the power of the federal government to negotiate directly with drug companies. But many of the law’s most sweeping ambitions will not take full effect for several years.

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Focusing on the drug industry’s patents — which allow them to squeeze out competitors’ low-cost, generic rivals — can produce much faster, albeit targeted returns.

Democrats’ goal is “to remake drug pricing — and patents are the reason that drug prices are so high,” said Peter Maybarduk, who directs the access-to-medicines group at the consumer advocacy organization Public Citizen. “A lot of the measures that we’re taking collectively to reduce drug prices now are mitigation strategies for a bad patent system.”

The new patent strategy melds the enforcement powers of the FTC with the bully pulpit of Congress.

The FTC challenged more than 100 drug industry patents in November 2023, focused on patents for brand-name inhalers, epinephrine autoinjectors (also known as EpiPens) and other devices, followed quickly by pressure from Warren and Jayapal. Within weeks, the companies had withdrawn at least 27 of their challenged patents, helping cut the costs of several EpiPens.

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Sanders, who chairs the Senate health panel, also announced an investigation in January into why U.S. inhaler prices were hundreds of dollars higher than their cost abroad, threatening to haul executives in for hearings. Within 75 days, AstraZeneca, Boehringer Ingelheim and GlaxoSmithKline had voluntarily pledged to cap the out-of-pocket cost of their inhalers at $35 a month. The caps began taking effect June 1 — a victory that Democrats can tout in an election year.

The FTC is preparing further actions against companies that did not remove their patents after last year’s challenges, said the person with knowledge of the enforcement process.

The idea of challenging patents has bipartisan appeal. Two former senior Trump administration officials suggested the strategy could be continued in a second Trump administration, with one of the former officials characterizing it as “overdue.”

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“[T]his strikes me as a likely sensible use of FTC resources,” Benedic N. Ippolito, a senior fellow in economic policy studies at the conservative-leaning American Enterprise Institute, wrote in a text message. “My general view on these types of issues is that if Congress wrote down a set of rules for this market, we ought to enforce the rules.”

Opening the ‘Orange Book’

Democrats’ new strategy centers on a semi-obscure Food and Drug Administration listing commonly known as the Orange Book — named for the color of the cover of its print edition — which contains patents submitted by the drug industry. If a generic competitor wants to make its own, low-cost alternative to a branded drug listed in the Orange Book, the process often triggers a 30-month delay, at minimum.

“The listing in the Orange Book creates so much protection for the patent holder that it ends up protecting drugs long after the patent has expired or even protects drugs that never had patent coverage to begin with,” Warren said.

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The drug industry’s use of the Orange Book had raised questions inside the FTC for years, current and former agency officials said, pointing to a 2002 study of the issue. But the officials said the agency did not consider filing challenges to questionable patents until Khan issued a call for new approaches to crack down on anti-competitive behavior and one staffer in the policy-planning office proposed the Orange Book strategy.

The FTC then issued a September 2023 policy statement explaining that some Orange Book listings were clearly improper and that the agency would be watching the drug industry.

“Instead of saying let’s write an amicus brief every time we see this in a litigation, we thought, let’s put the market on notice,” said Elizabeth Wilkins, who served as the FTC’s chief of staff before leaving the agency late last year.

The FTC and congressional Democrats’ joint efforts were touted at the White House in April, when Khan and Sanders joined President Biden to blast drug companies for what they said were attempts to take advantage of the patent system, such as tweaking the cap of an inhaler.

“They use the new patent on that cap to block generic drug companies from being able to enter the market,” Biden said. “Playing these games with patients and pricing, Big Pharma is able to charge Americans significantly higher prices and pad their profits.”

The strategy has continued to gain support in Congress, with Sen. Dick Durbin (D-Ill.), the No. 2 Democrat in the Senate, holding a hearing of the Senate Judiciary Committee last month to examine the Orange Book and reaffirming his support in a meeting with Khan this week.

Warren also said she is working with the Biden administration to change the rules of the road, which some pharma companies have complained are unclear.

“I’m pushing the FDA to rewrite the Orange Book rules altogether, so that Big Pharma isn’t offered this opportunity to fence off any kind of drug competition,” she said.

Democrats ramp up patent fight with drug industry in bid to lower prices (2024)

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