After a series of decisive court losses, the pharmaceutical industry appears to be taking its fight against Medicare drug price negotiations directly to the people—and the White House is not impressed.
This week, the high-powered industry group PhRMA (the Pharmaceutical Research and Manufacturers of America) released two eye-catching attacks on federal efforts to lower America’s singularly astronomical drug prices. In a press release Tuesday, PhRMA announced an analysis suggesting that the Medicare drug price negotiations—part of the Biden administration’s 2022 Inflation Reduction Act—could actually cost some seniors and people with disabilities slightly more in out-of-pocket costs. The analysis, however, relies on a key—and questionable—assumption that the federal government will set price limits using the highest possible estimate for maximum fair prices in 2026.
Milliman, the consulting firm PhRMA commissioned to do the study, cautioned that the actual prices “will certainly vary due to differences in unit cost and utilization trend, 2026 benefit designs, and actual 2026 maximum fair prices.”
On Wednesday, PhRMA then announced an “educational campaign” on how the US intellectual property system “is actually the vehicle for lower [drug] costs.” The bold claim is likely jarring to the many critics of the pharmaceutical industry, who for years have noted how drug companies exploit double patenting or “patent thickets” to extend monopolies on drugs and hold off low-cost generics from entering the market.
“They’ll lose”
For instance, staunch drug pricing critic Sen. Bernie Sanders (I-Vt.) has railed against patent thickets in congressional reports, noting that companies often file dozens of patents for a single drug. Merck, for instance, has 168 patents on its cancer drug Keytruda, most of which were filed after the drug was approved by the Food and Drug Administration. Johnson & Johnson, meanwhile, filed 57 patents on arthritis treatment Stelara, 79 percent of which were filed after FDA approval.
Merck and Johnson & Johnson are both members of PhRMA, along with many other big-name drug companies, including Pfizer, Bayer, GSK, Lilly, Novo Nordisk, and Sanofi.
A 2022 study in Nature Biotechnology found that of 179 patents covering nine biologic drugs that were the focus of patent infringement lawsuits, 94 percent of the patents covered minor or peripheral aspects of a drug, such as manufacturing techniques. Only 11 of the 179 patents, 6 percent, were related to the actual active ingredient in a drug. However, these tangles of secondary patents effectively allowed drug companies to extend market exclusivity well beyond the 12-year period provided by federal laws.
In an attempt to uproot some of those thickets, the US Patent and Trademark Office proposed a rule last month that would affect certain add-on patents, called terminal disclaimers. Under the proposed rule, if a drug company puts a terminal disclaimer on several patents, and one of those patents gets invalidated for any reason, the drug company would agree not to enforce any of the other patents linked by the terminal disclaimer.
On Wednesday, the Biden administration hit back at PhRMA’s attacks on drug pricing reforms. In a statement that provided links to PhRMA’s efforts this week, White House spokesperson Andrew Bates called Big Pharma’s pricing on drugs “corporate rip-offs.” He noted that the pharmaceutical industry spent an “unprecedented $372 million lobbying against” drug pricing reforms but lost the fight against the passage of the Inflation Reduction Act.
“Now that President Biden is delivering real savings for the families who have been overcharged by Big Pharma for medicines they desperately need, they’re continuing to fight tooth and nail against the financial interests of American seniors,” Bates said. “They’ll lose this fight, too.”
