The ERISA Industry Committee (ERIC) today praised a proposed rule by the U.S. Patent and Trademark Office (USPTO) to increase competition in the prescription drug markets, boosting the availability of affordable biosimilar drugs by reforming patent policies. The new rule would crack down on “terminal disclaimers,” a strategy used by branded drug manufacturers to stave off competition for much longer than Congress intended.
“Today’s patent system is supposed to balance innovation and competition, but too often, the only innovation that seems to emerge is another gimmick used to extend a patent. That abusive activity is enriching some, but it leaves the consumer – including employers and their workforce – holding the bag,” said Melissa Bartlett, ERIC’s Senior Vice President of Health Policy. “Taking action to reform our broken patent system is critical to reestablishing the balance between innovation and competition that Congress intended, so Americans have more timely and affordable access to more affordable drug therapies.”
Under current law, patents awarded to prescription drug manufacturers are intended to protect the science, research, and resources associated with creating and developing a new drug or therapy for 20 years, beginning with the time the patent application was first submitted. However, drug manufacturers regularly submit patent requests multiple times on virtually the same drug, effectively creating what experts call “patent thickets” to protect the drug’s exclusivity beyond the original timeline. The proposed rule allows patents tied together through terminal disclaimers to rise and fall together, by requiring an acknowledgement from the patent owner that the claims are non-patentably distinct from the earlier patent. As a result, if a patent is invalidated that is linked to another patent by a terminal disclaimer, then the linked patent should also be unenforceable.
ERIC has worked with elected officials and regulators to advance policies to increase the use of biosimilar medicines, lower costs, and create a more sustainable environment for employers providing benefits and the employees and families depending on them. Those efforts include:
- In 2020, ERIC launched a groundbreaking initiative to better understand the role that biosimilars could play in reducing healthcare costs, and found that biosimilars saved employers, employees, and their families significant amounts of money. The researchers also identified barriers to the availability of biosimilars in the marketplace, including barriers and loopholes in the current patent system, such as “obviousness-type double patenting” (OTDP) and the use of terminal disclaimers.
- In 2023, ERIC called on the USPTO to limit or eliminate patent policies that allow drug manufacturers to extend monopolies for certain prescription drugs.
- During the 118th Congress, ERIC has endorsed bipartisan and bicameral legislation to infuse greater transparency and competition in the prescription drug market.
Read ERIC’s comment letter here.