Patents Under Debate As Pharma Executives Face US Senate Committee

Executives of seven large pharmaceutical companies faced questioning yesterday from the United States Senate Finance Committee over high drug prices in the US, especially compared with other developed countries. One issue that came under the microscope was patents.

The full hearing on 26 February was webcast live and is available on the PBS News Hour, PBS News Hour, here. The Senate Finance Committee itself did not appear to webcast it live, but now has posted it as well, here. The Committee site also has the testimony of the chairman and ranking member, and of the seven executives.

Those testifying were: Richard Gonzalez, chairman and CEO, AbbVie; Pascal Soriot, executive director and CEO, AstraZeneca; Giovanni Caforio, chairman of the board and CEO, Bristol-Myers Squibb; Jennifer Taubert, executive vice president, worldwide chairman, Janssen Pharmaceuticals, Johnson & Johnson; Kenneth Frazier, chairman and CEO, Merck & Co., Albert Bourla, CEO, Pfizer, and Olivier Brandicourt, CEO, Sanofi. All are based in New Jersey, New York or Delaware, though four out of seven executives are European.

During the three hour hearing, the pharma representatives repeatedly warned senators that harm to the existing R&D incentive system would risk future breakthroughs. They also reminded them of the jobs that are created in their states by pharma. And throughout the hearing there were references by senators and CEOs to the fact that they and their families rely on their medicines.

There were several points at which executives admitted that US consumers pay higher prices than other countries and are carrying the load for research and development. AbbVie’s Gonzalez said, “The US does bear the burden of our innovation. That’s absolutely true.”

But they mainly sought to share the blame for the high prices US consumers face, singling out repeatedly some of the other incentives and mechanisms in the chain, particularly “PBMs” or price benefit managers that are designed to reduce prescription medicine costs. They also targeted insurance companies, and distributors.

Frazier of Merck said they would like to work with the committee to stop “price gouging” by some who inflate prices on off-patent medicines.

On another point, Bourla suggested the US work to change price controls in other countries through trade agreements, as “a lot of well-developed nations are free-riding.”

Ultimately, the message from the executives appeared to be to first, do no harm to the current system that incentives them to spend billions on risky R&D in order to find the next breakthrough, and second, that the system is complex and would be best served to bring all the parties in the process to the table with patients at the center.

Some senators called them out on issues like the fact that they receive huge revenue from US taxpayers for their research and then come back and charge the same consumers astronomical prices.

Sen. Debbie Stabenow of Michigan, a Democrat, said: “I’m glad you mentioned the cost of research and I hope you’ll say thank you to the American taxpayer. A report found that NIH contributed to every single one of the 210 new drugs approved by the FDA from 2010 to 2016, and American taxpayers contributed more than $200 billion in grants, not loans, to the companies, to develop these drugs.” That’s about 200,000 years of accumulated research, she said.

“The auto industry would love to get the kind of profits that you have,” she remarked. Michigan is home to the US auto industry. “But the reality is, if people can’t buy a car, they can’t buy furniture, their life is not threatened. If they can’t buy your product, it may be.”

She directed questions at Gonzalez, as she said his company’s product Humira is the “world’s best-selling drug.” She said they introduced the drug in 2003, and in 2017 it generated $18.4 billion in revenue. If Humira was its own company, it would be among the Fortune 500 companies, she noted. The average person on Medicare is earning $26,000 per year, and Humira started at a high price and has gone higher to a point where it is now as much as $50,000 per year, even though the primary patent expired in the US in 2016.

And she pointed out that they have over a hundred other patents on various processes and techniques related to Humira some of which go until the year 2034, which gives 31 years of patent protection on this drug. “That’s a pretty good deal on this successful drug,” she said.

Has the drug itself gotten any better with all the new patents? she asked.

Gonzalez answered carefully, saying as you look at the evolution of that patent portfolio, it evolved as they discovered or learned new things about Humira. In particular, as they discovered that this particular molecule could be utilized across a large number of diseases (beyond arthritis).

Stabenow retorted that as she understands it then, the chemical is the same for the different uses, “it’s just a matter of how we use the patent system.”

Looking at Europe, she said when the company’s patents expired in the fall of 2018, two biosimilars came on the market, “your prices there were already lower than in the US, but now you are offering up to 80 percent discounts to be able to continue to compete in Europe.”

“With all of the support from American taxpayers on this drug, why don’t you offer the same low price to American families?” Stabenow asked.

Gonzalez replied, “Because Humira plays a very important role in AbbVie’s overall funding of R&D.”

“If you look at these inventions that we’ve created, that are patented, they’ve included a number of different diseases for which Humira was effective, and they evolved over time,” he said. “We think we have struck a reasonable balance. We have now licensed seven biosimilar players to the entire portfolio, so they can use that portfolio to go out and copy Humira. We’ve given licences to them that they’ll all enter the market in 2023. The earliest patent to expire in that portfolio is June of 2022, so literally seven biosimilars will come in within a year.

Stabenow concluded sharply: “Let me just say, I think you charge more here because you can, and American taxpayers are subsidizing all of you in order to be able to have incredibly high profits, the fastest-growing part of the healthcare system, and I think the people in Michigan and across the country deserve better. They need to be able to afford the medicine and not have to go to another country to get it.”

Sen. John Cornyn of Texas, a Republican, returned to the topic, saying he understands that the US wants to maintain the most innovative drug companies in the world, and that he understands that is the purpose of the patent system, to protect the exclusivity of that innovation. But what said he does not understand is that Humira has a large number of patents, some of which do not expire until 2034, while the drug was first sold to patients in 2003.

“So is it your company’s position that it should have an exclusive monopoly on that medicine for 31 years?” Cornyn asked.

Gonzalez answered, “No it’s not. Patents cover the innovations that we created, and one of the things that I think has been lost here is, it doesn’t matter how many patents you have” – clarifying that they have 247 patent applications, and 136 actual granted patents. “Humira is like 9 different drugs, 10 different drugs. It is the same molecule but it treats different conditions, and if you look at that patent portfolio….”

Cornyn interrupted: “So if you use the same molecule to treat a different condition, you can get a patent on that?”

Gonzalez replied: “Certainly.” For instance, one area that got a “significant number” of patents was inflammatory bowel disease, he said. They realized Humira might work, and it was an area that was under-treated, most drugs had failed, they did 20 clinical trials to determine how to make Humira work in those patients, and they were issued a “large number of patents” for the discovery work they did in that area.

“But in the end, the number of patents is not something that protects a product,” Gonzalez said. “If a competitor wants to make a generic version of a product, there are patents everywhere. The question is, does the invention stop the biosimilar player from making the product. If the invention doesn’t, the patent is meaningless.”

“But the patent gives you an exclusive right to produce a drug,” Cornyn persisted.

“No,” Gonzalez said, “we don’t block any biosimilars. Biosimilars can make the product. … The composition of matter patent would give you exclusive rights to produce the drug. But the patents that are covered in this portfolio are for individual innovations that were created. In many cases, when we go into an area, there are always patents. The first thing you do is you look to see, can I design around those patents. If ultimately you determine you cannot design around those patents, then you go to the player who has the patent and you negotiate a licence. And we have now given a licence to virtually every single biosimilar player with the exception of one, and we’ve done it literally 10 years before the last patent expires in that portfolio.

“So we tried to strike what we think is a reasonable balance,” Gonzalez said. “I realize it may not be popular, but I think it is a reasonable balance.”

 

Image Credits: PBS