‘CREATES Act’ would only create more lawsuits

Sen. Patrick Leahy (D-Vt., ACU Lifetime Rating: 5%) is leading the effort in the Senate to diminish the property rights of inventors.  His legislation would fundamentally weaken the patent protection system for innovators whose ideas and efforts fuel our economy.  It should come as no surprise that he is the sponsor of a bill that undermines the patents of drug manufacturers which have produced numerous innovative treatments which have saved countless lives.

Like the flawed PATENT Act, the CREATES Act (S. 3056) sets out to tackle a specific problem and, in the end, makes the situation worse.  With the PATENT Act, the problem is so-called “patent trolls” that harass small businesses over alleged patent infringement, but the bill’s “solution” would mainly benefit large tech firms which want to make products using patented technology owned by others without paying for it.

{mosads}Sen. Leahy’s CREATES Act is based on a desire by generic drug firms to have expedited access to certain drugs owned by some brand name drug makers so they can get a head start on developing copied versions of the drugs.

The CREATES Act largely ignores safety concerns pertaining to a very specific type of drug: those labeled high-risk.  A 2007 law allows the Food and Drug Administration (FDA) to impose additional rules on certain drugs that carry serious safety risks.  They are assigned a special protocol called “risk evaluation and mitigation strategies” with “elements to assure safe use” (often referred to in shorthand as REMS with ETASU, respectively) —REMS with ETASU may involve distribution restrictions, such as a requirement that the drug be distributed only in certain healthcare settings (e.g., hospitals).  In many cases, this is because the drugs — although valuable for specific medical problems — can be extremely dangerous if used incorrectly.  It’s the manufacturers’ responsibility to see that REMS with ETASU is implemented and that their employees as well as medical professionals and pharmacies adhere to the REMS with ETASU.

Yet generic and biosimilar drug firms also rely on the approvals of brand name innovators to add to their product line.  To succeed in bringing their generic products to market, those firms must also show that their generic versions work as well as the branded versions through comparative testing, which may include clinical trials.  Such testing requires obtaining samples of the branded drugs.  This system works well for all parties most of the time.

However, the generic and biosimilar firms contend that some brand name drug companies are using the protocol requirements for high-risk drugs to prevent them from getting the samples they need to generate their copied versions of their drugs.  Of course, the brand name companies have explained that they are merely trying to protect the REMS with ETASU systems that, in turn, protect patients’ safety.  (Indeed, if patients were harmed by a generic drug, consumers would be unlikely to distinguish between it and the original version.)  But, for the sake of argument, let’s say the generic and biosimilar firms have a valid concern and the current rules are not sufficient.  What is the best way of solving the problem?

It would seem that if the current rules aren’t doing the job, the logical solution would be to revise the rules to make the system work the way it is supposed to.  Instead, the CREATES Act attempts to solve the problem by giving generic and biosimilar manufacturers a new right to sue and litigate in federal court even if it would be years before a generic or biosimilar drug could be approved or marketed, and it wouldn’t take much to trigger a lawsuit.  Moreover, the proposed legislative measure would create a short one month deadline for drug companies to provide samples, after which the generic company can sue.  This is unreasonable.  The Hatch-Waxman Act already allows generic companies the ability to step on the patent rights of innovators in order to give them a head start on competing products.  The CREATES Act would tip the scale so far against innovators that it would chill further (and much needed) innovation.  That means fewer cures. 

The U.S. patent system, which is a key element of America’s unique constitutional protection of intellectual property rights, has been under assault in recent years, and the one sure consequence of this legislation would be to further weaken the system by concocting a whole new avenue of expensive litigation.  That’s the last thing our health care system needs right now.

Dan Schneider is the Executive Director of the American Conservative Union and Larry Hart is a Senior Fellow at the American Conservative Union Foundation.