The litigation involved AbbVie Inc. and its arthritis drug, adalimumab, marketed in the United States as Humira. The main patent on Humira expired in 2016, but AbbVie has obtained some 132 more, the vast majority of which were issued in 2014 or later. Most of these new patents relate to the drug formulation or manufacturing process. The last of them expires in 2034.
The practice of adding new patents to an old drug, while common in the pharmaceutical industry, is often ridiculed for creating what critics call a “patent thicket” – which in turn is believed to have anti-competitive effects. . And Humira, with annual sales of over $20 billion, has been labeled the “poster kid” for patent thickening. Even the then-serving commissioner of the Food and Drug Administration was brought in to complain last year about Humira’s “vast patent estate.”
The case decided by the 7th Circuit was filed by a group of health plans who argued that by obtaining so many patents and asserting them in litigation against potential market entrants, AbbVie violated the law. Sherman. The trial court dismissed the lawsuit, and this week the 7th Circuit agreed that the dismissal was proper.
The simplest way to understand the claim of the plaintiffs is this: the 132 patents are so intimidating that no generic manufacturer has dared to enter the market. Even though some patents may turn out to be invalid, no pharmaceutical company wants to spend resources pirating the thicket they create. (See how the metaphor works?) As a result, even though Humira’s original patent has expired, the drug has no competitors.
It looks impressive. But Judge Easterbrook, who has long been one of the nation’s most renowned antitrust scholars, cuts short on the plaintiffs’ claims.
First, the thicket might be less intimidating than the plaintiffs seem to think. Most drugs are so-called synthetics, and the Food and Drug Administration is required to suspend the approval process if a patent infringement lawsuit is filed against the plaintiff. But Humira is an organic product, isolated from natural sources. Since 2007, federal law allows the FDA to approve biological applications even if an infringement action has been filed. Additionally, once the agency has given its blessing to the “biosimilar” drug, the manufacturer has the right to launch “at risk” – that is, to market the biosimilar even as the lawsuit moves forward.
So why has no competitor been launched? Plaintiffs claim that other companies have been scared off by the thicket created by all these patents.
Judge Easterbrook is not convinced: “But what’s wrong with having a lot of patents? If AbbVie has made 132 inventions, why can’t it hold 132 patents? As long as your patents are valid, he reasons, asserting them in litigation cannot violate antitrust law. Are they valid here? All 132 have been approved by the Patent Office and, as the court points out, “every patent carries a presumption of validity”.
Certainly, a defendant in an infringement action can challenge the validity of the underlying patents. Why didn’t it happen here? After all, when every potential competitor approached federal regulators, AbbVie immediately sued. Shouldn’t the defendants have reacted by trying to invalidate all or part of these 132 patents?
Maybe. But the prosecutions never reached that point. Instead, AbbVie has agreed to settle each of its lawsuits under terms that allow biosimilars to enter the market in 2023 – well before the last of the Humira patents expires.
Such “acceleration clauses” have long been common in pharmaceutical counterfeit case settlements. Often, the patent holder will allow entry before the patent expires, but will pay the generic drug maker to delay entry for a few more years. Critics argue that such deals are illegal under antitrust law, a question the US Supreme Court has left open. Here, however, no money changed hands. As Easterbrook says, “0 + 0 = 0.”(1)
The 7th Circuit’s reasoning is clear and simple enough to make one wonder why the lawsuit was filed. Admittedly, the litigation started before the pandemic, which means that Big Pharma had not yet developed the Covid vaccines and had not become a hero.
Or perhaps the lawsuit was an effort to lower proxy drug prices. It would be easy to understand. Prices are often high. But study after study has found that the social benefits of a successful new drug, even a relatively expensive one, almost always far outweigh the costs.
Even if we are not convinced, let’s not forget that biosimilar substitutes for Humira will be available next year. In short, the federal system works. The law promotes competition between pharmaceutical companies, and there is no more effective tool to moderate prices.
More writers at Bloomberg Opinion:
• Finally, a simple strategy for Covid booster shots: Lisa Jarvis
• How Kansas’ abortion vote matters — and doesn’t matter: Jonathan Bernstein
• Jobful’s ‘Vibecession’ will keep workers on the payroll: Conor Sen
(1) Most disputes over so-called “reverse payment” settlements involve synthetics, not biologics. The difference is important because the law governing synthetics grants the first approved generic 180 days of market exclusivity, which means that delaying the first generic is like delaying all generics. No such exclusivity is available for organic products.
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Stephen L. Carter is a Bloomberg Opinion columnist. A law professor at Yale University, he is the author, most recently, of “Invisible: the story of the black lawyer who shot down America’s most powerful gangster”.
More stories like this are available at bloomberg.com/opinion
