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An Antitrust Threat to Innovation

Legislation titled the “Affordable Prescriptions for Patients Act” should be wonderful and help patients. But you can’t judge a bill by its title. In this case, you’d do so at your peril, if you think new, better forms of an existing medicine are actually good for patients.

This bill, S. 1416, would subject any improvements to existing pharmaceuticals under patent to a heavy-handed Federal Trade Commission. Follow-on innovation — new formulations, more tolerable versions, those easier to take and stay on schedule, types having fewer side effects, better manufacturing processes — would treat these incremental improvements to harsh antitrust scrutiny.

S. 1416 labels normal, constructive modifications and improvements as anticompetitive. What practically every inventor does, which leads over time to building a patent portfolio in a technology, would be castigated as “product hopping” and “patent thickets.” The FTC could swoop in, antitrust claws poised, because a pharma innovator has been spending its R&D resources making improvements to an existing drug.

“It is a perverse result indeed when the misapplication of the competition laws results in less innovation, less competition, and ultimately, fewer consumer choices,” Assistant Attorney General for Antitrust Makan Delrahim has said. Yet, that’s exactly the result S. 1416 would have on biopharmaceutical progress. The legislation would hurt innovation, hurt competition and hurt consumer choice because of misuse of antitrust laws.

This legislation essentially presumes an antitrust violation for most any improvement made once a drug gets its initial FDA approval. That’s nuts!

The bill’s author voiced consternation that one drug could have more than 100 patents tied to it, when the Senate iP Subcommittee held a hearing with the Patent Office director, Andrei Iancu. (Heck, a golf ball has 60 patents.) The witness explained that every single invention must undergo examination and meet the statutory criteria of being new, useful and not obvious to an expert in the field before a patent is issued.

The misguided legislation ignores this fact and would stop the clock of medical progress, on penalty of a presumption of antitrust violation. Patients will have only original formulations available. This will surely quash competition and innovation instead of make drugs more affordable.

Mr. Delrahim says “competition and consumers both benefit when inventors have full incentives to exploit their patent rights.” That lesson escapes anyone who supports S. 1416.

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