Federal Trade Commission Plans Effort Against Drug Patent Abuses

June 6, 2024 by Tom Ramstack
Federal Trade Commission Plans Effort Against Drug Patent Abuses
(Photo by Hosny Salah via Pixabay)

WASHINGTON — Federal officials are discussing a strategy to block pharmaceutical companies from abusing patent rights that can keep drug prices high.

The chairman of the Senate Judiciary Committee met with the chairwoman of the Federal Trade Commission Thursday to work on a plan to prevent drug companies from extending their patent rights beyond their normal expiration dates. 

When their patent rights are close to expiring, some companies are accused of filing for extensions based on false claims.

Patent owners have the exclusive rights to make and sell their inventions. These rights allow companies that develop the inventions to recover sometimes enormous research and development costs.

They also could profit enormously if they own the rights to important technology.

Extensions to their rights can be granted by filing claims in the Federal Trade Commission’s Orange Book. It consists of a list of drug products approved as safe and effective that might be eligible for additional patent protection.

The Federal Trade Commission says there have been more than 400 drug products improperly listed in the Orange Book by drug companies. 

The listings have the effect of extending the drug companies’ exclusive rights to sell the drugs until their claims are investigated by the government and found to be warranted or unauthorized.

Pharmaceutical companies that file for the extensions typically say they have modified their drugs in a way that should merit additional time to recover their expenses.

The Federal Trade Commission accuses some of them of exaggerating their claims to prevent generic drug companies from producing similar drugs, thereby cutting into the profits of the original patent holders.

The result can be higher drug prices for consumers.

President Joe Biden pledged shortly after winning the 2020 election to crack down on big corporations that exploit consumers with their market dominance. He appointed Lina Khan, the current head of the Federal Trade Commission, to lead the effort.

Sen. Dick Durbin, R-Ill., chairman of the Senate Judiciary Committee, met with Khan Thursday to discuss how they would proceed against the overpriced drugs.

“The Federal Trade Commission is tasked with protecting American consumers from the potential harms of corporations, whether that’s Big Tech or Big Pharma,” Durbin said in a statement after the meeting.

He did not give details of any agreement he reached with Khan.

The Senate Judiciary Committee held a hearing on high drug prices last month as it considers legislation to bring down costs for consumers.

The committee’s figures show that in 2022, pharmaceutical companies raised prices on more than 1,200 medications by an average of 32%, or four times the inflation rate.

“The pharmaceutical industry will tell you that the high prescription drug prices are the cost of innovation and point to billions of dollars they spend on research and development,” Durbin said at the hearing.

The truth is that the National Institutes of Health funded 99% of all new drugs approved by the Food and Drug Administration between 2010 and 2019, according to Durbin. The $187 billion in government funding benefited development of 354 of the 356 new drugs approved during the same time period.

Rather than a result of big development costs for drug companies, the high prices consumers pay “are the result of skilled lawyers manipulating the patent system and skirting our nation’s competition laws,” Durbin said.

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  • Dick Durbin
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  • Lina Khan
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