America’s track record in medical innovation stands as one of our nation’s most remarkable achievements, setting us apart as a global leader in the development of lifesaving drugs and treatments. Our laws incentivize competition and private sector investments in research and development (R&D) that drive medical breakthroughs. However, current legislative efforts threaten America’s edge in this space and the benefits it brings for taxpayers and patients.
Developing a new treatment or medication carries with it immense costs and risks. Creating a single new medicine typically takes years to complete, with some processes costing around $2.6 billion. This process is extremely risky, as most drugs that enter the development pipeline never make it to market. Those that do are critical for American patients and families.
Patent protections are an integral part of this system and provide an incentive for companies and investors to take these risks. They provide a period of market exclusivity during which companies can recoup their investment without the immediate threat of competition. This period is critical for recovering their high costs and reinvesting in the research that leads to the next generation of treatments.
Critics argue that patents stifle competition and keep drug prices high. However, patents are not meant to exist in perpetuity. They are for a set period of time only. Once a patent expires, other companies can produce generic versions of the drug, often at a significantly lower cost. When functioning properly, this balance between innovation and competition ensures that American patients and taxpayers receive world-beating access to cutting-edge, affordable, and safe medications.
Unfortunately, recent proposals in Congress threaten this carefully balanced system, potentially harming innovation and patient access to lifesaving drugs. The Medication Affordability and Patent Integrity Act is one such example of how a well-intentioned policy can have massive consequences throughout the healthcare ecosystem. It can also disrupt the risk calculus for many American pharmaceutical companies.
The Medication Affordability and Patent Integrity Act imposes new certification and disclosure requirements on pharmaceutical companies. These requirements would force companies to provide large amounts of data to the US Patent and Trademark Office (USPTO), much of which is already submitted to the Food and Drug Administration (FDA). This excessive bureaucracy would overburden the already strained USPTO, potentially stifling innovation.
This is yet another example of American companies being punished for bureaucratic inefficiencies within the federal government. Pharmaceutical companies should not bear the paperwork hassle created by poor interagency communications. Given the connectivity between the two agencies in this critical space, Congress should not create any more potential for confusion, hassle, or added costs to an already expensive and time-consuming process.
This legislation also raises significant security concerns regarding American intellectual property (IP). It would require companies to share sensitive information with another government agency, increasing the risk of leaks. This is especially concerning, given the federal government’s recent poor track record of securing sensitive data. With this legislation in place, the consequences of leaks or hacks are multiplied and hang over the heads of those expected to invest in developing the life-saving cures of tomorrow.
This is particularly troubling given the ongoing threat of IP theft by foreign adversaries, such as China, which already costs America’s economy billions of dollars annually. Opening up our IP – as well as additional sensitive information – to foreign governments undermines the strength of our innovation economy. Further, it threatens the myriad benefits that our culture of innovation brings to American workers, taxpayers, and patients.
Sadly, neither the Medication Affordability and Patent Integrity Act nor the accompanying Biosimilar Red Tape Elimination Act do anything to address pharmacy benefit managers' (PBMs) anti-competitive practices. These middlemen in the American healthcare system often block access to lower-cost biosimilars in favor of higher-priced drugs that offer larger rebates. In short, Congress would create new challenges while failing to address existing barriers to making new and affordable drugs accessible to patients.
These legislative efforts risk doing more harm than good. Risking delays in drug approvals and opening up our IP to malicious actors will only harm taxpayers and patients down the line. Lawmakers must carefully consider the long-term implications of such policies and prioritize protecting the systems that have made the United States a leader in pharmaceutical innovation.
David Williams is the president of the Taxpayers Protection Alliance.