Each year, Americans spend more than $1,500 per person on prescription drugs.1 Critics calling for measures to lower prescription drug costs often cast blame on alleged abuses of patent and competition laws. To address these perceived abuses, President Biden issued an "Executive Order on Promoting Competition in the American Economy" focused on increasing competition in several industries, including the pharmaceutical and biotechnology industries. In response, executive agencies and members of Congress have recently issued reports and letters addressing the concerns and directives presented in President Biden's executive order.
This Jones Day White Paper outlines: (i) President Biden's executive order and documents issued in response; (ii) proposed changes to the U.S. patent and drug regulatory regimes; and (iii) potential effects of those proposals on the pharmaceutical and biotechnology industries.
As part of an overall strategy to reduce health care spending, the Biden administration continues past proposed regulatory reform that is focused on increasing the availability of generic drugs and biosimilars. Pharmaceutical and biotechnology innovators likely will face increased scrutiny of their research and development, patenting, litigation settlement, and pricing practices, as well as streamlined regulatory processes for the approval of competing generic and biosimilar products. This administration also has signaled its focus on driving significant statutory and regulatory changes impacting the pharmaceutical industry.
EXECUTIVE ORDER ON PROMOTING COMPETITION IN THE AMERICAN ECONOMY
On July 9, 2021, President Biden issued an " Executive Order on Promoting Competition in the American Economy" ("Competition EO"). The Competition EO set forth a statement of the Biden administration's policy goals, established a White House Competition Council, and directed executive agencies to adopt rules, issue reports, and consider other actions to redress perceived deficiencies in competition across the economy
The Competition EO emphasized that the Biden administration aims to "enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony."
A significant portion of the Competition EO targeted the pharmaceutical/biotech and health care sectors, including directing:
- The Federal Trade Commission ("FTC") to consider rulemaking related to "unfair anticompetitive conduct or agreements in prescription drug industries, such as agreements to delay the market entry of generic drugs or biosimilars" (also known as "reverse-payment settlements" or "pay-for-delay" agreements).
- The Department of Health and Human Services ("HHS") and FTC to identify and address "false, misleading, or otherwise deceptive statements about generic drug or biosimilar products and their safety or effectiveness" and to "promptly issu[e] Covered Product Authorizations" to allow generic and biosimilar developers to obtain brand samples for drugs subject to Risk Evaluation and Mitigation Strategies with elements to ensure safe use.
- HHS to "clarify and improve the approval framework for generic drugs and biosimilars" and to support "biosimilar product adoption by providing effective educational materials and communications to improve understanding."
- The Administrator of the Centers for Medicare & Medicaid Services ("CMS") to "prepare for Medicare and Medicaid coverage of interchangeable biological products."
- The Commissioner of FDA to "work with States and Indian Tribes that propose to develop section 804 Importation Programs" to permit those entities to import eligible prescription drugs from Canada.
- The Director of the National Institute of Standards and Technology ("NIST") to "consider not finalizing any provisions on march-in rights and product pricing" in rules proposed in January 2021 (which included language that "[m]arch-in rights shall not be exercised exclusively based on the business decisions of the contractor regarding the pricing of commercial goods and services arising from the practical application of the invention").
The Competition EO also ordered FDA to write a letter to the Patent and Trademark Office ("PTO") describing any FDA concerns about the patent system "unjustifiably" delaying generic and biosimilar competition "beyond that reasonably contemplated by applicable law." Similarly, the Competition EO ordered HHS to submit a report "with a plan to continue the effort to combat excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce prices paid by the Federal Government for such drugs, and to address the recurrent problem of price gouging."
As discussed below, since the issuance of the Competition EO, FDA and HHS have issued the requested documents, and members of Congress separately have sent letters to the PTO setting forth their own views.
LETTERS TO THE PTO
On September 10, 2021, the Acting Commissioner of Food and Drugs, Janet Woodcock, M.D., issued the ordered letter ("FDA letter") on behalf of FDA, to Mr. Andrew Hirshfeld, who is currently performing the functions and duties of the Under Secretary of Commerce for Intellectual Property and Director of the PTO.
1 See U.S. Dep't of Health and Hum. Servs., Off. of the Assistant Sec'y for Plan. and Evaluation, "A Report in Response to the Executive Order on Competition in the American Economy" 2 (2021).
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