The Honorable Robert Goodlatte
`Chairman
`House Judiciary Committee
`2138 Rayburn Building
`Washington, D.C. 20515
`
`The Honorable John Conyers
`Ranking Member
`House Judiciary Committee
`B-351 Rayburn Building
`Washington, D.C. 20515
`
`Dear Chairmen Grassley and Goodlatte and Ranking Members Leahy and Conyers:
`
`As organizations representing consumers, health insurance plans, and pharmacy benefits
`managers, we write to express our strong support for your efforts through the bipartisan Protecting
`American Talent and Entrepreneurship (PATENT) Act of 2015 to address abuses in the patent
`system that unnecessarily drive up the cost of health care.
`
`However, we are seriously concerned with efforts to modify the PATENT Act by including a special
`carve-out for brand name drug manufacturers from the inter partes review (IPR) process before the
`U.S. Patent and Trademark Office. The IPR process—implemented in 2012 under the America
`Invents Act (AIA)—is intended to improve the patent system by creating an expedited, less
`expensive alternative to challenging weak patents through the courts. It is a critical consumer
`protection against abusive patent extensions that limit patient access to more affordable treatment
`options, delay market entry of less expensive generic therapies, and drive up drug costs. Simply,
`exempting branded drug manufacturers from the IPR process is unwarranted and harmful to
`consumers. To that end, we strongly oppose any exemption from the IPR process for drug
`and biologic patents.
`
`We are particularly concerned that such an exemption would provide little protection against a
`widely-used practice known as “evergreening” where manufacturers make minor modifications to
`existing products in order to extend patent protection for years. Evergreening results in substantial
`additional spending on prescription drugs that do not measurably improve quality of care.
`Exempting drug patents from the IPR process would make it easier for manufacturers to engage in
`this behavior. As a result, consumers, payers, and public programs like Medicare and Medicaid
`will face even higher drug costs at a time when such spending is already unsustainable.1,2
`
`
`1 Kaiser Health Tracking Poll, “The Public Says Prescription Drug Prices Are Unreasonable,” June 16, 2015,
`http://kff.org/health-costs/poll-finding/kaiser-health-tracking-poll-june-2015/
`2 Morning Consult Polling, “Sponsored Poll from the Campaign for the Sustainable Rx Pricing: High Prescription Drug
`Costs a Major Concern for Voters,” June 23, 2015, http://morningconsult.com/polls/sponsored-poll-from-the-campaign-
`for-the-sustainable-rx-pricing-high-prescription-drug-costs-a-major-concern-for-voters/
`
`
`
`July 9, 2015
`
`The Honorable Charles Grassley
`Chairman
`
`
`
`Senate Judiciary Committee
`152 Dirksen Building
`
`Washington, D.C. 20510
`
`
`The Honorable Patrick Leahy
`Ranking Member
`
`
`Senate Judiciary Committee
`224 Dirksen Building
`
`Washington, D.C. 20510
`
`
`
`
`CFAD Exhibit 1037
`
`

`
`
`While manufacturers claim the IPR process makes invalidating drug patents too easy, the data
`show that IPR challenges to pharmaceutical patents represent a small fraction of the challenges
`submitted to the PTO. Consequently, it is premature to make drastic changes to IPRs until more
`data are available to truly evaluate how the process is working. Further, every indication is that
`IPR process works in harmony—not in conflict—with the goals of Hatch-Waxman. It encourages
`challenges to weak patents to expedite generic drug entry to the benefit of the U.S. healthcare
`system. When it comes to price, there is a significant difference between generic and brand name
`drugs. On average, generic drug prices are 80 to 85 percent lower than comparable branded drug
`prices.3 Overall, generic drugs have saved the U.S. health care system nearly $1.5 trillion over the
`past 10 years.4
`
`IPR challenges will also become increasingly important to encourage the development of the
`emerging biosimilar market. The IPR process should accelerate the availability of these lower cost
`therapies. The Biologics Price Competition and Innovation Act (BPCIA) already provides for 12
`years of statutory market exclusivity for new biologics from the date of FDA approval. Reference
`biologics are often covered by hundreds of patents, which could lead to significant extensions of
`exclusivity well beyond the statutory period. Biosimilar developers have no simple way to
`determine what patents are covered, but the IPR process offers a path to legal certainty earlier in
`the biosimilar development cycle.
`
`As you know, the daily costs associated with biologics are enormously higher—approximately 22
`times higher—than those for small-molecule drugs.5 With annual or treatment regimen costs that
`can exceed $400,0006, the cost of biologics adversely affects consumers, health plans, PBMs, and
`taxpayers. Studies suggest that the price savings from biosimilars could be 10 to 50 percent versus
`branded biologics. Given the focus by manufacturers on biologics, IPR challenges may be critical
`to realizing future biosimilar savings.
`
`In sum, we believe that the IPR process is largely working as intended by providing a more cost-
`effective avenue to challenge weak patents that extend monopolies for high cost prescription
`drugs. As such, we oppose any exemption from the IPR process for brand name drug
`manufacturers. In addition, we ask the Committee to fully consider the implications of any such
`exemption in terms of increased spending for payers, including Medicare and Medicaid, and higher
`prices for consumers. It would be unfortunate if this issue was to impede progress of the larger
`patent reform effort.
`
`Thank you for considering our views on this important issue that will have an impact on consumers,
`taxpayers and the entire U.S. healthcare system.
`
`Sincerely,
`
`Joyce A. Rogers
`Senior Vice President, Government Affairs, AARP
`
`Matthew D. Eyles
`
`3 Facts about Generic Drugs,
`http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/UnderstandingGenericDrugs/ucm1
`67991.htm
`4 Generic Pharmaceutical Association, Generic Drug Savings in the U.S, Sixth Annual Edition: 2014,
`http://www.gphaonline.org/media/cms/GPhA_Savings_Report.9.10.14_FINAL.pdf
`5 A.D. So and S.L. Katz, “Biologics Boondoggle.” New York Times, March 7, 2010.
`6 M. Herper, “The World’s Most Expensive Drugs,” Forbes, February 22, 2010.
`
`CFAD Exhibit 1037
`
`

`
`Executive Vice President, Policy & Regulatory Affairs, AHIP
`
`Alissa Fox
`Senior Vice President, Office of Policy and Representation, BCBSA
`
`Kristin Bass
`Senior Vice President, Policy and Federal Affairs, PCMA
`
`cc: All House and Senate Judiciary Committee Members
`
`The Honorable Lamar Alexander, Chairman, Senate HELP Committee
`The Honorable Patty Murray, Ranking Member, Senate HELP Committee
`The Honorable Fred Upton, Chairman, House Energy and Commerce Committee
`The Honorable Frank Pallone, Jr., Ranking Member, House Energy and Commerce Committee
`
`CFAD Exhibit 1037