Patents and Access

Resolution Text

RESOLVED, that shareholders of Eli Lilly & Co. (“Lilly”) ask the Board of Directors to establish and report on a process by which the impact of extended patent exclusivities on product access would be considered in deciding whether to apply for secondary and tertiary patents. Secondary and tertiary patents are patents applied for after the main active ingredient/molecule patent(s) and which relate to the product. The report on the process should be prepared at reasonable cost, omitting confidential and proprietary information, and be published on Lilly’s website.

SUPPORTING STATEMENT:  According to a 2021 Congressional Research Service report, “Intellectual property rights play an important role in the development and pricing of prescription drugs and biologics.”[1] When patent protection on a drug ends, generic manufacturers can enter the market, reducing prices. According to the report, branded drug manufacturers may try to delay generic competition and impact access by extending their exclusivity periods. 

In part because of this behavior, access to medicines is the subject of consistent and widespread public debate in the U.S. A 2021 Rand Corporation analysis concluded that U.S. prices for branded drugs were nearly 3.5 times higher than prices in 32 OECD member countries.[2] The Kaiser Family Foundation has “consistently found prescription drug costs to be an important health policy area of public interest and public concern.”[3] 

This high level of concern has driven policy responses. The Inflation Reduction Act (“IRA”) empowers the federal government to negotiate some drug prices, and in fact some have argued it enacts significant patent reform, specifically around the issue this proposal addresses. The IRA provision stating that the only drugs that can be considered for price negotiations are those with no generic competition has the effect of discouraging extended patent exclusivities. One law firm asserts that “prevailing in a patent infringement lawsuit against a forthcoming competitor may no longer be as valuable for a branded drug company because high-expenditure single-source drugs are at risk of being selected for price negotiation if there is no generic or biosimilar competitor on the market.”[4]

Additionally, five bipartisan bills aimed at providing speedier access to generics have been introduced in the Senate:

Ensuring Timely Access to Generics Act of 2023 (S. 1067)
Expanding Access to Low-Cost Generics Act of 2023 (S. 1114)
Increasing Transparency in Generic Drug Applications Act of 2023 (S. 775)
Preserve Access to Affordable Generics and Biosimilars Act of 2023 (S. 142)
Stop STALLING Act of 2023 (S. 148)

In our view, a process that considers the impact of extended exclusivity periods on patient access would ensure that Lilly considers not only whether it can apply for secondary and tertiary patents but also whether it should do so.  Such a process could, we believe, bolster Lilly’s reputation and help avoid regulatory blowback resulting from high drug prices and perceptions regarding abusive patenting practices.

[1]  https://crsreports.congress.gov/product/pdf/R/R46679

[2] https://www.rand.org/news/press/2021/01/28.html

[3] https://www.kff.org/health-costs/poll-finding/public-opinion-on-prescription-drugs-and-their-prices/

[4] https://www.akingump.com/en/insights/alerts/the-impact-of-the-inflation-reduction-act-of-2022-on-pharmaceutical-innovation-patent-litigation-and-market-entry