Some of the world’s biggest pharmaceutical companies are fighting shareholder proposals to force them to reveal information about their use of controversial patent strategies that could delay rivals from launching cheaper versions of blockbuster drugs.
A coalition of ethical investors has asked Johnson & Johnson, Merck, Pfizer, Eli Lilly, Gilead, Amgen, Regeneron, Bristol Myers Squibb and AbbVie to publish reports on the process they follow when applying for multiple patents on a single drug.
The report should shed light on whether the patent strategy is designed to maximize the exclusivity of best-selling drugs and what impact it has on patient access, according to shareholders, including Mercy Investment Services and Trinity Health.
Eight of the nine companies opposed the proposal at the Securities and Exchange Commission. Companies regularly challenge shareholder proposals at the SEC and often win. BMS is still involved in discussions with investors.
The shareholder proposals come amid a public debate over drug companies’ use of so-called “patenting,” which creates multiple and sometimes hundreds of patents beyond the main patent covering a particular compound. Critics say the strategy delays the launch of generic drugs by rivals even after the 20-year exclusivity period on blockbuster drugs’ key patents has expired.
“If you don’t have competition, manufacturers can just run rampant prices and what you see in the US is the most expensive health care system in the world,” said Lydia Kuykendal, director of shareholder advocacy at Mercy Investment Services.
He said the difference in patent systems between the US and the EU meant that European patients usually had access to cheaper generic drugs up to five years before their American counterparts.
Humira, the best-selling drug in the world, which collected $ 200bn in global sales for AbbVie, faces competition in Europe in 2018. But the first biosimilar competitor can only be launched this year in the US due to extensive “patent pending”. made around the drug, competing claims.
“You can’t litigate over 100 patents: it’s too expensive and too risky,” says Rachel Goode, head of Legal and Intellectual Property at Fresenius Kabi, a healthcare company that makes generic drugs.
He said many branded drug companies use the “double patenting” technique, where they claim the same or obvious variations of an invention in more than one patent. It’s not an incremental innovation that improves therapy for patients, Goode said.
The US Patent and Trademark Office and the Food and Drug Administration are reviewing their work practices to ensure faster access to the market for generic drugs and biosimilars following requests from the Biden administration, which is targeting high drug prices.
Big pharma defends its patent strategy, arguing that intellectual property protection is needed to justify continued investment in existing drugs. These investments drive innovations that benefit patients, such as new dosage regimens, delivery methods and combinations with other drugs that offer real benefits to patients, he said.
The eight companies told the SEC that the shareholder proposals should be eliminated for a number of reasons, including that they are attempts to “micro-manage the business” and involve complex scientific and legal topics outside the expertise of shareholders. Implementing the proposals could destroy the company’s core business model, said Merck in response to a proposal made by The Capuchin Franciscan Province of St.
US Senator Elizabeth Warren has asked the US patent office to investigate Merck’s request for a new patent on cancer drug Keytruda © REUTERS
The Capuchin Order proposal cited a 2021 study by I-Mak, a research group focused on health inequalities, which found that Merck had filed 95 secondary patents on the cancer drug Keytruda. Two of these five patent applications relate to “production and processing methods that can be used to produce a drug”, which could prevent competition even if the drug’s main patent has expired, the Order said in its proposal.
I-Mak Research suggests Merck has sought up to 180 patents on Keytruda, which is predicted to be the world’s best-selling drug this year, with sales of around $24bn. The drug is scheduled to lose the exclusivity granted by the patent especially in 2028 but many analysts believe that Merck will be able to use “patent protection” to delay the introduction of competitor drugs.
“Keytruda’s patent estate actually extends beyond 2028,” said Umer Raffat, an analyst at Evercore ISI. “They are innovating beyond existing drug compounds and this strategy should support Merck’s earnings for decades to come.”
Last week, US Senator Elizabeth Warren sent the director of the US patent office, Kathi Vidal, a letter asking for more scrutiny of Merck’s request for a new patent on Keytruda, including a new delivery method – injection under the skin.
“It’s not clear that Merck is doing anything other than extending its monopoly power over the drug,” Warren said.
A Merck spokesperson said the company has developed many innovations that increase the benefits of Keytruda to reach more patients and increase the effectiveness of the treatment. “Where appropriate, Merck seeks to protect additional innovations,” he said.
Merck says it continues to look towards the end of 2028 as the most likely time for biosimilars to enter the market.