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Congress hears varied advice for thorny patent issues in lowering drug prices

Lawmakers at a Capitol Hill hearing heard an array of advice on how to delve into the thorny patent issues involved in trying to lower U.S. drug prices — from being aggressive in adopting a package of recently introduced bills to approaching some of the measures with caution.

At issue before the House Energy and Commerce Health Subcommittee on March 13 were seven bills, three of which are bipartisan — authored by Democrats and Republicans together — that are aimed at getting lower-cost versions of brand-name medicines to the market quicker.

"We have an opportunity for us to address something that's been an enormous burden on the American consumer and the taxpayer," said Rep. Peter Welch, D-Vt.

But Washington lawyer Kurt Karst, director at Hyman Phelps & McNamara PC, urged lawmakers to ensure they are doing no harm in tinkering with long-established laws, like the Drug Price Competition and Patent Term Restoration Act of 1984 — commonly known as Hatch-Waxman — which gave the U.S. Food and Drug Administration the authority to approve generic medicines.

Amending Hatch-Waxman "is akin to performing brain surgery: one wrong move can have dire consequences," Karst told the lawmakers.

Among the bills are two bipartisan measures — the Creating and Restoring Equal Access to Equivalent Samples, or CREATES, Act, H.R. 965, and the Fair Access for Safe and Timely Generics Act, H.R. 985 — which are intended to ensure generic manufacturers can access the samples of brand-name medicines they need to complete their bioequivalence studies for U.S. approval.

Some brand-name drugmakers have used various tactics to impede access to their samples to thwart competition from lower-cost rivals.

The CREATES Act, which has a companion bill in the Senate, enjoys strong bipartisan support on both sides of the Capitol.

Ending the gaming tactics

The Bringing Low-cost Options and Competition while Keeping Incentives for New Generics, or BLOCKING, Act, H.R. 938, is aimed at ending a gaming tactic known as "parking."

Generic companies that are first to file FDA applications of versions of brand-name medicines are granted a 180-day exclusivity period.

But in some cases, companies will delay, or park, their product rather than having it enter the market, therefore delaying the start of the 180-day clock.

The tactic is often used because the generic maker has entered into a "pay-for-delay" agreement with a branded company.

Such agreements not only delay the cheaper generics from coming to the market, but they also delay lower prices from reaching patients sooner, said Rep. Anna Eshoo, D-Calif., chairwoman of the subcommittee.

The BLOCKING Act would allow the FDA to approve a subsequent generic application prior to the first applicant's first date of commercial marketing when the subsequent application is ready for full approval; a minimum of 30 months has passed since at least one first applicant submitted their application for the drug; any related patent litigation has been fully resolved; and no first applicant is approved.

Rep. Kurt Schrader, D-Ore., who co-authored the BLOCKING Act with Rep. Buddy Carter, R-Ga., said the bill would not revoke, diminish or shorten any period of exclusivity for the first generic filer but would put manufacturers on notice "to keep the ball rolling."

But Karst said the bill would end up diluting the 180-day exclusivity period — "the brass ring" for generic makers — and would impose an "immensely and unnecessarily complex framework."

The litigation that would ensue would "keep me in business for a generation," Karst said.

He said the BLOCKING Act would make the 180-day exclusivity eligibility far more unpredictable for generic applicants, reducing the incentives they have to challenge brand-name manufacturers' patents.

Karst insisted that the legislation was not necessary since the FDA has the statutory and regulatory authority to determine that eligibility for the exclusivity is forfeited or that it should not be granted because a first applicant has not diligently pursued approval of their generic medicine.

But Michael Carrier, a professor at Rutgers Law School, said the best tool to prevent gaming of the 180-day exclusivity period would be to adopt the Fair and Immediate Release of Generic Drugs Act, H.R. 1506. The bill would allow any generic filer who wins a patent challenge in court or is not sued for patent infringement by the brand manufacturer to share in the 180-day exclusivity period of first applicants that enter into patent settlements that delay entry.

Carrier said Congress should also adopt the Protecting Consumer Access to Generic Drugs Act, H.R. 1499, which would make pay-for-delay deals illegal.

Avoiding lengthy litigation

Chester Davis, president and CEO of the Association for Accessible Medicines, the lobbying group for the generic drug industry, told lawmakers that his group opposed any legislation that prohibits patent settlement agreements or would make changes to the 180-day exclusivity period.

"We do not support pay for delay. Full stop," he said. But Davis said not all patent settlement agreements are bad, since they help parties avoid litigation and can actually accelerate a generic drug's pathway to the market.

If a generic manufacturer pursues patent litigation and loses, that could delay the cheaper product's market entrance even longer than under any agreement, Karst added.

But some lawmakers were not buying that argument, noting that many of those settlement agreements end up being quite lucrative for both parties — the generic manufacturer that gets paid and the brand-name company that gets to keep its monopoly for a longer period.