Curbing monopolies
Toolbox
By PAMELA GILBERT - Published: May 13, 2009
Sweeping changes to America's health care system are on the horizon, and lawmakers in Washington are bearing down for what could be an epic showdown. But one of Vermont's lawmakers has already quietly scored a big victory for affordable health care that has largely slipped below the radar.
In these tough economic times, many Americans have had no choice but to scale back their spending on even essential things like medicine and health care. That's why it was big — if largely unheralded — news when Sen. Patrick Leahy managed to pass a hotly contested patent reform bill out of the Judiciary Committee he chairs.
Patents let drug inventors maintain monopolies on their products. In the pharmaceutical industry, patents forbid generic versions of expensive, blockbuster drugs from being developed for around 20 years, when the patents finally expire.
Generic prescription drugs can be as much as 80 percent cheaper than brand medicines, and as such have played a tremendous role in reducing health care costs. But there are still many hurdles in the patent system that keep generic drug creation from being as robust as it should be. That's why the patent reform legislation working its way through Congress right now is so important. It may not seem to have anything to do with health care at first glance, but the revamped patent process it would implement has the potential to improve the affordability of health care for countless Americans.
Unfortunately, it is not yet clear which way the scales will tilt. The Patent Reform Act of 2009 is bellwether health care legislation; its final form may actually lead to even more expensive prescription drugs. As chairman of the committee that oversees the bill, Leahy has had to deal with one of the most thorny components of the legislation, a provision that deals with those almost never-ending monopolies that dictate when or if generics can enter the market.
This provision, known as the inequitable conduct doctrine, ensures brand name drug makers have to fight fair. It currently allows a generic drug maker to challenge a patent when it discovers an abuse of the system by a monopoly-seeking, brand name drug maker. The doctrine ensures these disputes don't get bogged down in the legal system, so that bogus monopolies don't continue in perpetuity.
It is little wonder there has been staunch opposition to this reasonable safeguard against cheating from Big Pharma. It argues the inequitable conduct doctrine thwarted innovation, stifled creativity, and overwhelmed an already burdened Patent Office.
In reality, the industry needs to eliminate this doctrine to preserve its monopoly-based business model, which has become less viable in recent years as its innovation pipeline has dried up. The withering of the once dominant U.S. pharmaceutical industry has led to its consolidation, such as when Pfizer recently bought Wyeth. Such deals do not signal growth — they signal a survival struggle. Pfizer has several blockbuster drugs like Lipitor (which account for almost one-fourth of sales) coming off patent soon.
Prolonging patents through any means (something the industry calls "life cycle management") has become the modus operandi of too many big pharmaceutical companies. After all, spending millions on lobbying against the inequitable conduct doctrine is cheaper than investing billions to invent a new drug.
Fortunately, Leahy understands this truth all too well. He knows that competition, not more monopolies, will bring Americans real savings. He fought off these big lobbyists and left this important flexibility in our patent system intact.
Patent reform has a long way to go. The pharmaceutical industry will attack the legislation before it is considered by the full Senate. But Leahy's courage and dedication to affordable health care may be enough to beat the competition. And in a fair fight, I like our chances.
Pamela Gilbert is a lawyer with Cuneo Gilbert & LaDuca and former executive director of the Consumer Product Safety Commission.
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