Shareholders Ask Nine Pharma Companies to Report on Whether Patent Protections are Reducing People’s Access to Medicines
As high drug prices persist, proposals seek to understand whether access is being considered in petitions for patent exclusivity extensions – a mainstay sector strategy to block competition and control pricing.
NEW YORK, NY – TUESDAY, DECEMBER 13TH, 2022 – Members of the Interfaith Center of Corporate Responsibility and shareholders in major pharma companies today announced that they have filed proposals at nine pharma companies seeking a report on the link between their patent protection strategies and people’s access to medicine.
The proposals were filed at AbbVie ($ABBV), Amgen ($AMGN), BMY ($BMY), Eli Lilly ($LLY), Gilead ($GILD), JNJ ($JNJ), Merck ($MRK), Pfizer ($PFE), and Regeneron ($REGN) with a similar request at all companies, if a different group of reasons for each:
RESOLVED, that shareholders 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.
Intellectual property protections on branded drugs play an important role in maintaining high prices and impeding widescale access to medicine. When patent protection on a drug ends, generic manufacturers can enter the market with a lower-priced formulation that generally results in increased access. For this reason, branded drug manufacturers often deploy a variety of strategies to delay generic competition and extend their exclusivity periods.
“The cost of medicines has long been a barrier to health,”said Lydia Kuykendal of Mercy Investment Services, which led the filings at Amgen and Johnson & Johnson. “Drug makers engaging in excessive patenting prevents generic competition and keeps prices high for the patients in need of these medicines – sometimes a matter of life or death. We are asking companies to develop and disclose a process that considers patient access in their patenting strategy. This transparency is critical to ensuring that everyone understands companies’ pricing decisions and how they factor in the impact of drug prices on the patients relying on these medicines.”
In January 2019, the House Committee on Oversight and Reform (the “Committee”) launched a far-reaching investigation into the public health and economic impacts of escalating drug pricing. Among the anti-competitive abuses described by the Committee’s report, released in December 2021, is the construction of “patent thickets”, which consist of many secondary patents designed to intentionally delay the expiration of patent exclusivities.
“By the time a pharma company enters a drug into the market, they have already planned their petitions for future secondary and tertiary patents to prolong their exclusivity,” said Meg Jones-Monteiro, Director of ICCR’s Health Equity program. “These ‘patent thickets’ are quite elaborate and include things like petitions for exclusivity on the formulations, dosing, or methods of using, administering, or manufacturing a drug, which together conspire to impede primary patent expiration and lower-cost generic manufacturing.”
These practices have prompted heightened scrutiny on the part of legislators and regulators. In June 2022, citing the impact of patent thickets on drug prices, a bipartisan group of Senators urged the U.S. Patent and Trademark Office to “take regulatory steps to . . . eliminate large collections of patents on a single invention.”
“In our view, a process that considers the impact of extended exclusivity periods on patient access would ensure that drug companies consider not only whether they can apply for secondary and tertiary patents but also whether they should,” said Cathy Rowan of Trinity Health, which led the filing at Pfizer and Eli Lilly. “A more thoughtful process could help pharma companies avoid the significant regulatory and reputational risks resulting from high drug prices and perceptions regarding abusive patenting practices.”
“Members of ICCR have been engaging the pharma sector for decades to advocate for changes in policies and practices that will increase the access and affordability of medicines,” said Sr. Judy Byron of the Northwest Coalition for Responsible Investment, which led the filing of the proposal at Gilead. “These patent practices erect barriers to access that clearly prioritize company profits over people's health. As shareholders, we view this as fundamentally at odds with the purported missions of our companies.”
Director of Communications
Interfaith Center on Corporate Responsibility (ICCR)