A Republican senator wants to clamp down on drug companies that use multiple patents to extend their monopolies, colloquially known as “patent thickets.”
Sen. John Cornyn (R-Texas) plans to introduce a bill soon that would give the Federal Trade Commission authority to sue drugmakers that game the patent system or “product hop” by making minor formula adjustments to prevent generic substitutions.
Cornyn sits on the Senate Finance and Judiciary committees, both of which will collaborate on the drug-pricing package that Senate Finance Committee Chair Chuck Grassley (R-Iowa) says he wants wrapped up by June or July.
Cornyn isn’t alone in wanting to address patent abuses as part of the overall effort to bring down prices.
Rep. David Cicilline (D-R.I.), who chairs the antitrust panel on the House Judiciary Committee said earlier this month that he plans to look at the patent system through his committee in the next couple of months.
A spokesperson for the Senate Judiciary Committee’s antitrust panel did not immediately return a request for comment on any prospective plans for hearings or other work on the issue.
The intensifying scrutiny of the patent system has the pharmaceutical industry on edge, and the latest earnings report from AbbVie could indicate why.
AbbVie, manufacturer of the blockbuster drug Humira, has 136 patents on the drug that secure its monopoly in the U.S. until 2023 even though it launched here in 2003. Humira is an anti-inflammatory used to treat rheumatoid arthritis.
On Thursday the company reported that its U.S. net revenue grew by $3.2 billion or 7.1% in the first quarter of 2019. But internationally, due to biosimilar competition in Europe, net revenue declined by $1.23 billion or nearly 28%, according to Seeking Alpha.
This led to a 5.6% global net revenue decline for the drug’s revenue on a reported basis.
AbbVie CEO Richard Gonzalez faced harsh words from lawmakers during February’s Senate Finance Committee hearing with the executives of seven top drug manufacturing firms, largely over Humira’s skyrocketing cost and myriad patents. Cornyn told Gonzalez he would like to bring in the Senate Judiciary Committee to look at pharmaceutical patent abuses.
“I support drug companies recovering a profit based on R&D and development of innovative drugs,” Cornyn said during the hearing. “But at some point the exclusivity has to end.”
Gonzalez acknowledged in his testimony that Humira is making a profit in every country where it’s sold.
On Thursday, despite Humira’s depressed revenue, AbbVie reported its overall earnings were up. Gonzalez told investors the company is “off to another excellent start, including first-quarter sales and earnings above expectations.”