WASHINGTON, D.C. – Early last year, as lawmakers vowed to curb rising drug prices, Sen. Thom Tillis was named chairman of the Senate Judiciary Committee’s subcommittee on intellectual property rights, a committee that had not met since 2007.
As the new gatekeeper for laws and oversight of the nation’s patent system, the North Carolina Republican signaled he was determined to make it easier for American businesses to benefit from it — a welcome message to the drugmakers who already leverage patents to block competitors and keep prices high.
Less than three weeks after introducing a bill that would make it harder for generic drugmakers to compete with patent-holding drugmakers, Tillis opened the subcommittee’s first meeting on Feb. 26, 2019, with his own vow.
“From the United States Patent and Trademark Office to the State Department’s Office of Intellectual Property Enforcement, no department or bureau is too big or too small for this subcommittee to take interest,” he said. “And we will.”
In the months that followed, tens of thousands of dollars flowed from pharmaceutical companies toward his campaign, as well as to the campaigns of other subcommittee members — including some who promised to stop drugmakers from playing money-making games with the patent system, like Sen. John Cornyn (R-Texas).
Tillis received more than $156,000 from political action committees tied to drug manufacturers in 2019, more than any other member of Congress, a new analysis of KHN’s Pharma Cash to Congress database shows.
Sen. Chris Coons (D-DE), the top Democrat on the subcommittee who worked side by side with Tillis, received more than $124,000 in drugmaker contributions last year, making him the No. 3 recipient in Congress. No. 2 was Sen. Mitch McConnell (R-KY), who took in about $139,000. As the Senate majority leader, he controls what legislation gets voted on by the Senate.
Neither Tillis nor Coons sits on the Senate committees that introduced legislation last year to lower drug prices through methods like capping price increases to the rate of inflation. Of the four senators who drafted those bills, none received more than $76,000 from drug manufacturers in 2019.
Tillis and Coons spent much of last year working on significant legislation that would expand the range of items eligible to be patented — a change that some experts say would make it easier for companies developing medical tests and treatments to own things that aren’t traditionally inventions, like genetic code. They have not yet officially introduced a bill.
As obscure as patents might seem in an era of public outrage over drug prices, the fact that drugmakers gave most to the lawmakers working to change the patent system belies how important securing the exclusive right to market a drug, and keep competitors at bay, is to their bottom line.
“Pharma will fight to the death to preserve patent rights,” said Robin Feldman, a professor at the UC Hastings College of the Law in San Francisco who is an expert in intellectual property rights and drug pricing. “Strong patent rights are central to the games drug companies play to extend their monopolies and keep prices high.”
Campaign contributions, closely tracked by the Federal Election Commission, are among the few windows into how much money flows from the political groups of drugmakers and other companies to the lawmakers and their campaigns.
Private companies generally give money to members of Congress to encourage them to listen to the companies, typically through lobbyists, whose activities are difficult to track. They may also communicate through so-called dark money groups, which are not required to report who gives them money.
Over the past 10 years, the pharmaceutical industry has spent about $233 million per year on lobbying, according to a new study published in JAMA Internal Medicine. That is more than any other industry, including the oil and gas industry.
Why Patents Matter
Developing and testing a new drug, and gaining approval from the Food and Drug Administration, can take years and cost hundreds of millions of dollars. Drugmakers are generally granted a six- or seven-year exclusivity period to recoup their investments.
But drugmakers have found ways to extend that period of exclusivity, sometimes accumulating hundreds of patents on the same drug and blocking competition for decades. One method is to patent many inventions beyond a drug’s active ingredient, such as patenting the injection device that administers the drug.
Keeping that arrangement intact, or expanding what can be patented, is where lawmakers come in.
Lawmakers Dig In
Tillis’ home state of North Carolina is also home to three major research universities and, not coincidentally, multiple drugmakers’ headquarters, factories and other facilities. From his swearing-in in 2015 to the end of 2018, Tillis received about $160,000 from drugmakers based there or beyond.
He almost matched that four-year total in 2019 alone, in the midst of a difficult reelection campaign to be decided this fall. He has raised nearly $10 million for his campaign, with lobbyists among his biggest contributors, according to OpenSecrets.
Daniel Keylin, a spokesperson for Tillis, said Tillis and Coons, the subcommittee’s top Democrat, are working to overhaul the country’s “antiquated intellectual property laws.”
Keylin said the bipartisan effort protects the development and access to affordable, lifesaving medication for patients,” adding: “No contribution has any impact on how [Tillis] votes or legislates.”
Tillis signaled his openness to the drug industry early on. The day before being named chairman, he reintroduced a bill that would limit the options generic drugmakers have to challenge allegedly invalid patents, effectively helping brand-name drugmakers protect their monopolies.
Former Sen. Orrin Hatch (R-UT), whose warm relationship with the drug industry was well-known, had introduced the legislation, the Hatch-Waxman Integrity Act, just days before his retirement in 2018.
At his subcommittee’s first hearing, Tillis said the members would rely on testimony from private businesses to guide them. He promised to hold hearings on patent eligibility standards and “reforms to the Patent Trial and Appeal Board.”
In practice, the Hatch-Waxman Integrity Act would require generics makers challenging another drugmaker’s patent to either take their claim to the Patent Trial and Appeal Board, which acts as a sort of cheaper, faster quality check to catch bad patents, or file a lawsuit.
A study released last year found that, since Congress created the Patent Trial and Appeal Board in 2011, it has narrowed or overturned about 51% of the drugmaker patents that generics makers have challenged. Feldman said the drug industry “went berserk” over the number of patents the board changed and has been eager to limit use of the board as much as possible.
Patent reviewers are often stretched thin and sometimes make mistakes, said Aaron Kesselheim, a Harvard Medical School professor who is an expert in intellectual property rights and drug development. Limiting the ways to challenge patents, as Tillis’ bill would, does not strengthen the patent system, he said.
“You want overlapping oversight for a system that is as important and fundamental as this system is,” he said.
As promised, Tillis and Coons also spent much of the year working on so-called Section 101 reform regarding what is eligible to be patented — “a very major change” that “would overturn more than a century of Supreme Court law,” Feldman said.
Sean Coit, Coons’ spokesperson, said lowering drug prices is one of the senator’s top priorities and pointed to Coon’s support for legislation the pharmaceutical industry opposes.
“One of the reasons Senator Coons is leading efforts in Congress to fix our broken patent system is so that life-saving medicines can actually be developed and produced at affordable prices for every American,” Coit wrote in an email, adding that “his work on Section 101 reform has brought together advocates from across the spectrum, including academics and health experts.”
In August, when much of Capitol Hill had emptied for summer recess, Tillis and Coons held closed-door meetings to preview their legislation to stakeholders, including the Pharmaceutical Research and Manufacturers of America, or PhRMA, the brand-name drug industry’s lobbying group.
“We regularly engage with members of Congress in both parties to advance practical policy solutions that will lower medicine costs for patients,” said Holly Campbell, a PhRMA spokesperson.
Neither proposal has received a public hearing.
In the 30 days before Tillis and Coons were named leaders of the revived subcommittee, drug manufacturers gave them $21,000 from their political action committees. In the 30 days following that first hearing, Tillis and Coons received $60,000.
Among their donors were PhRMA; the Biotechnology Innovation Organization, the biotech lobbying group; and five of the seven drugmakers whose executives — as Tillis laid out a pharma-friendly agenda for his new subcommittee — were getting chewed out by senators in a different hearing room over patent abuse.
Cornyn Goes After Patent Abuse
Richard Gonzalez, chief executive of AbbVie Inc., the company known for its top-selling drug, Humira, had spent the morning sitting stone-faced before the Senate Finance Committee as, one after another, senators excoriated him and six other executives of brand-name drug manufacturers over how they price their products.
Cornyn brought up AbbVie’s more than 130 patents on Humira. Hadn’t the company blocked its competition? Cornyn asked Gonzalez, who carefully explained how AbbVie’s lawsuit against a generics competitor and subsequent licensing deal was not what he would describe as anti-competitive behavior.
“I realize it may not be popular,” Gonzalez said. “But I think it is a reasonable balance.”
A minute later, Cornyn turned to Sen. Chuck Grassley (R-Iowa), who, like Cornyn, was also a member of the revived intellectual property subcommittee. This is worth looking into with “our Judiciary Committee authorities as well,” Cornyn said, effectively threatening legislation on patent abuse.
The next day, Mylan, one of the largest producers of generic drugs, gave Cornyn $5,000, FEC records show. The company had not donated to Cornyn in years. By midsummer, every drug company that sent an executive to that hearing had given money to Cornyn, including AbbVie.
Cornyn, who faces perhaps the most difficult reelection fight of his career this fall, ranks No. 6 among members of Congress in drugmaker PAC contributions last year, KHN’s analysis shows. He received about $104,000.
Cornyn has received about $708,500 from drugmakers since 2007, KHN’s database shows. According to OpenSecrets, he has raised more than $17 million for this year’s reelection campaign.
Cornyn’s office declined to comment.
On May 9, Cornyn and Sen. Richard Blumenthal (D-Conn.) introduced the Affordable Prescriptions for Patients Act, which proposed to define two tactics used by drug companies to make it easier for the Federal Trade Commission to prosecute them: “product-hopping,” when drugmakers withdraw older versions of their drugs from the market to push patients toward newer, more expensive ones, and “patent-thicketing,” when drugmakers amass a series of patents to drag out their exclusivity and slow rival generics makers, who must challenge those patents to enter the market once the initial exclusivity ends.
PhRMA opposed the bill. The next day, it gave Cornyn $1,000.
Cornyn and Blumenthal’s bill would have been “very tough on the techniques that pharmaceutical companies use to extend patent protections and to keep prices high,” Feldman said.
“The pharmaceutical industry lobbied tooth and nail against it,” she said. “And when the bill finally came out of committee, the strongest provisions — the patent-thicketing provisions — had been stripped.”
In the months after the bill cleared committee and waited to be taken up by the Senate, Cornyn blamed Senate Democrats for blocking the bill while trying to secure votes on legislation with more direct controls on drug prices.
The Senate has not voted on the bill.
Elizabeth Lucas contributed to this report. This story also ran on Daily Beast. It was published in cooperation with Kaiser Health News Network and The Published Reporter.
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