Senate Judiciary Committee Approves Prescription Drug Pricing Bills

On June 27, 2019, the Senate Judiciary Committee voted to advance four bills, summarized below, to the Senate floor.  Senate Judiciary Committee Chairman Lindsey Graham issued a statement that the bills “each in their own way will lower the cost of prescription drugs.”

  • S. 1227, the Prescription Pricing for the People Act of 2019, seeks to identify ways to “prevent and deter anticompetitive behavior in the pharmaceutical supply chain.” The bill would require the Federal Trade Commission to evaluate, among other things, if pharmacy benefit managers (PBMs) have engaged in anti-competitive practices by charging some payers, including Medicare and Medicaid, higher prices than pharmacies in which the PBM has an ownership interest or by using formulary designs to depress the market share of low-cost, lower-rebate prescription drugs.  Within 180 days after passage of the bill, the Federal Trade Commission would submit an interim report and preliminary findings to the Judiciary Committees of the Senate and the House of Representatives.  A final report would be due to within one year of passage of the bill.
  • S. 440, the Preserving Access to Cost Effective Drugs (PACED) Act, would prohibit patent owners from asserting sovereign immunity as a defense in certain actions before the USPTO, including inter partes and post-grant review proceedings. According to Senator Pat Toomey, one of the bill’s co-sponsors, “[s]ham transactions involving the transfer of patent ownership from a pharmaceutical company to a tribe for the sole purpose of shielding the patent from challenges are a clear abuse of our patent system and set a dangerous precedent for other consumer products. The PACED Act will improve our patent system and protect patients and consumers from higher drug prices by eliminating this egregious loophole.”
  • S. 1224, the Stop Significant and Time-wasting Abuse Limiting Legitimate Innovation of New Generics (Stop STALLING) Act, would enable the FTC to deter sham citizen petitions that are filed to slow down the generic drug and biosimilar review processes.  The bill defines a “sham” petition as one “that is objectively baseless and that attempts to use a governmental process, as opposed to the outcome of that process, to interfere with the business of a competitor, or a series of covered petitions that attempts to use a governmental process, as opposed to the outcome of that process, to interfere with the business of a competitor.”  A person found to have submitted a sham petition would be liable for engaging in unfair competition under section 5(a)(1) of the Federal Trade Commission Act.  Under the bill, the penalty for violations is the greater of (1) revenue earned from sales of a product referenced in the petition during the period that the petition was under review by the Secretary of Health and Human Services or (2) $50,000 per calendar day that the sham petition was under review by the Secretary of Health and Human Services.
  • S. 1416, the Affordable Prescriptions for Patients Act of 2019, would define “patent thicketing” and “product hopping” as anticompetitive behavior under the Federal Trade Commission Act. Under the law, one definition of “patent thicketing” is when the underlying composition of matter patent for a drug is found invalid and the patentee obtains patents in the same family or “patent portfolio” related to the use, formulation, manufacture, or other aspects of a single drug.  A drug manufacturer may overcome the presumption that obtaining the additional patents was anticompetitive if it establishes, by a preponderance of the evidence, that “the anticompetitive effects of [obtaining the patents] do not outweigh the pro-competitive effects of [obtaining the patents].”  Evidence to establish this may include that the inventions claimed in the additional patents provide “clinically meaningful and significant therapeutic safety benefits” or “other improved product attributes having substantial benefits for consumers or patients.”  The Commission can rebut the drug manufacturer’s evidence by establishing that the harm to consumers from the patent thicketing is greater than the benefits to consumers from such action.  The bill defines “product hopping” as when a drug manufacturer removes a listed drug or reference product from the market during a competition window, or markets a “follow-on product” (a reformulation of a drug) during the competition window.  The presumption that product hopping is anticompetitive can be rebutted by evidence that removal of the drug was due to significant and documented safety reasons, or that the follow-on product “provides a clinically meaningful and significant additional health benefit to the target population beyond that provided by the previously approved drug or biological product.”  The Commission can rebut the drug manufacturer’s evidence by showing that the product hopping caused greater harm than benefit to consumers, or that the primary purpose was to block or hinder entry of a generic or biosimilar product.

 

Stay tuned to Big Molecule Watch for further legislative updates.

 

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