Patent system key to lower drug prices, experts say

Following the Biden administration’s progress toward lowering prescription drug prices with Medicare price negotiations, some industry advocates want Congress to go a step further and close patent loopholes that prevent generic varieties of top-selling drugs.

“What we’ve been seeing lately is that companies are filing for dozens or even hundreds of patents to extend their monopoly period in order to keep their revenues, and that’s blocking competition from the market,” said Priti Krishtel, co-founder of medicine access nonprofit I-MAK.

Patents give companies 20 years of manufacturing exclusivity on their drugs and are designed to allow pharmaceutical companies to recoup development costs before the formula can be manufactured on a generic basis. Because of the monopoly patents create, prices of drugs under patent are always higher than those with generic alternatives.

Seven of the 10 best-selling drugs in the country are due to run out of patent protection within the next decade, causing pharmaceutical companies to scramble to extend their patents any way possible, Krishtel said.

Sen. Tina Smith (D-Minn.), who is a member of the Senate Committee on Health, Education, Labor and Pensions (HELP), explained that while it will be difficult to pass any major health care legislation in a divided Congress, there is some bipartisan support for lowering drug costs.

“The Senate HELP committee has traditionally worked in strong, bipartisan ways on prescription drugs, on mental health, on supporting community health centers. You always have to look for that place where you can find common ground,” Smith said. “Many of the bills that I’ve introduced to bring more competition to drug pricing are bipartisan bills. I’ve worked with Sen. (Bill) Cassidy (R-La.) … and Sen. (Roger) Marshall (R-Kan.) and others. We have to be optimistic.”

Smith said that despite being passed along partisan lines, the Inflation Reduction Act (IRA), which contains lines capping prescription drug prices for Medicare recipients, is popular among both Democrats and Republicans in her state.

The group spoke at an event hosted by The Hill on Thursday moderated by The Hill’s Editor in Chief Bob Cusack. The event was sponsored by the Pharmaceutical Care Management Association.

Rep. David Schweikert (R-Ariz.) said a key to any conversation on lowering drug prices is considering how any legislation would impact industry competition. He criticized the IRA price caps by saying they will discourage companies from developing new drugs and calling it a government-sponsored “protection racket.” 

Schweikert instead advocated for “hyper-disruption” in the pharmaceutical sector through financial incentives for manufacturing generic drugs. He praised a new factory being built in Virginia that plans to produce and sell generic insulin for $30 a vial — less than the government price cap for Medicare recipients.

“How do I get almost every company interested into the manufacturing business? How do I almost flood the market with competition?” Schweikert said.

He also advocated for direct-to-consumer drug sales, which could lower purchasing costs for the average American.

Despite signs that some on both sides of the aisle are willing to work toward legislation on the issue, there is little from either party’s leadership that progress is imminent, economic consultant Alex Brill said. Both parties have signaled that any modifications to Social Security or Medicare funding is unlikely in this year’s budget talks.

“The near-term rhetoric, from both parties, doesn’t give me a lot of hope,” Brill said. “There should be a strong desire to say to constituents and patients, ‘We’re going to bring down your health care costs,’ … but the headlines are that in the near-term, those policies are off the table.”

“Ultimately, Congress will be forced to address this issue. These are not choices,” he said. “This will become a necessity for Social Security, for Medicare and for others. They are on unsustainable paths, and structural changes will be required.”