The Swine Line

Well, I just returned back from a week’s vacation and was not surprised to learn that Washington remains the same. Political games and special favors continue to reign supreme.

Back in 2006, we learned of a unique piece of legislation that would have awarded one pharmaceutical company a special break on a patent extension. At that time, we called the legislation, “The Dog Ate My Homework Act.” In 2001, The Medicines Company had filed for a patent extension for their drug Angiomax…a popular anticoagulant or blood thinner. The only problem is their representative applied for the extension a day late. The U.S. Patent and Trade Office told them that because their application was untimely, they could not get an extension. We wrote a letter about it that can be found here and it provides some good context.

This is a big deal. Generic drug companies wait for patents to expire and when they do, they can sell their less expensive but identical drug, saving patients a lot of money. Plus, the first generic to reach the marketplace has 180 days of exclusivity so there is a great incentive to be the first to manufacture a generic drug. Once the 180 days expire, other companies can get into the act, providing even more savings.

There have been attempts in the past two years to get special legislation written to provide the Medicines Company a break for their costly mistake and their lobbying finally suceeded yesterday. The House considered and passed within 4 hours, H.R. 6344. While the title of the bill, “The Responsive Government Act of 2008″ sounds reasonable enough – it provides emergency authority to delay or extend judicial deadlines if there is a national emergency or natural disaster, it is Section 4 that is of the most interest.  Here the Medicines Company is given a special dispensation. It says:

(b) Fee for Late Filings-

(1) IN GENERAL- In order to effect a patent term extension under section 156(i) of title 35, United States Code, the patent holder shall pay a fee to the United States Treasury in the amount prescribed under paragraph (2).

(2) FEE AMOUNT-

(A) FEE AMOUNT- The patent holder shall pay a fee equal to–

(i) $65,000,000 with respect to any original application for a patent term extension, filed with the United States Patent and Trademark Office before the date of the enactment of this Act, for a drug intended for use in humans that is in the anticoagulant class of drugs…

In other words, for a cool $65 million, The Medicines Company will get their patent extension. That sounds like a lot of money but since the extension is supposed to last until December 2014, it is chump change considering the drug brought in about $255 million in 2007 alone.

There are two important issues here. First of all, many of the members who voted for this legislation often screech about how expensive pharmaceuticals are and have threatened to impose price controls on drug companies’ products. CAGW has always opposed this approach. We appreciate the time and money that goes into making a pharmaceutical and brand-name drug companies should be well compensated for their invention. After all, it is the profits that produce the next miracle drug. We have always argued that the best way to lower prices is through competition and generic drugs provide that competition.

Second, if the bill passes the Senate and gets signed into law, it will set a very bad precedent. Rules and deadlines are written for a reason. But now it appears, if you fail to meet them, convince Congress to write you a special law, pay a little ransom, and all will be right with the world.

We will be watching this bill closely.