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Bad Legislation Doesn’t Get Better With Age

By Larry Hart, ACU Senior Fellow – Originally Posted in Townhall

Like a bad penny, bad legislation keeps coming back on Capitol Hill, but, unlike fine wine, it does not get better with age. A good example of this is the CREATES Act, a favorite of Senator Patrick Leahy (D-VT, ACU Lifetime Rating: 5%) which purports to help generic drug companies get timely access to brand name drugs so they can be ready to go to  market when the patent runs out. The effect, however, would be to weaken patent protection for those innovators who developed the drug and risk the health and safety of consumers by short-circuiting safety protocols.

It comes as no surprise that Senator Leahy is a sponsor of legislation that is out to weaken a patent system that has helped make America the cradle of technology for 200 years.  He was also a key supporter of the PATENT Act, which used the specific problem of “patent trolls” harassing small businesses to eviscerate patent protections for inventors.  The CREATES Act also tackles a specific problem, but in the process threatens safety protections carefully put in place for a small category of drugs.  Both the PATENT and CREATES Acts died with the 114th Congress in 2016 but the CREATES Act has been resurrected and reintroduced in the 115th Congress as S. 954, even though recent legislation may have gone a long way to solving whatever problems exist.  So it is important to once again lay out the facts.

The CREATES Act affects only a small category of drugs, those labeled “high risk” by the Food and Drug Administration.  Ten years ago, the FDA set up a special health and safety protocol to make sure that everyone that handles these drugs understand how to use them correctly.  These protocols are named “risk evaluation and mitigation strategies” (REMS) and “elements to assure safe use” (ETASU).  In some cases, for example, these drugs can only be administered in restrictive settings, such as hospitals. Everyone agrees that these drugs, valuable as they are to treat specific problems, can be extremely dangerous when not used properly.  The manufacturers were given the responsibility to see that medical professionals and pharmacies understand and stick to the REMS and ETASU protocols.

At the same time, generic and biosimilar drug firms are tasked with proving their generic versions of a drug work as well as the name brand drug before they can bring them to market.  To do that, they need to obtain samples of the brand name drug to perform comparative testing, which may also include clinical trials.  Although the system has worked well more often than not, some generic firms have complained that some manufacturers were using the safety protocols as an excuse for delays in providing samples. The manufacturers, in turn, say they are responsible for patients’ safety and would get the blame if patients were harmed by the generic version.

It is worth noting that this controversy is over a small number of drugs (43 in all) and of that number, generic versions have been approved for 10 of them.  Samples have been obtained by some others, leaving 25 with the REMS and ETASU protocols at issue.  However, it is nonetheless important that a solution be found that allows for timely sharing of information to bring the generic drugs to market while protecting both the integrity of the patent while it is valid and protecting the consumer from mishandling of the drug.

Those that back the CREATES Act seem to believe there is only one solution to almost any problem:  expensive and time-consuming litigation.  The CREATES Act “creates” a new right to sue if a drug company did not meet a short one month deadline to provide samples.  This would go well beyond the system set up by the now 33 year old Hatch-Waxman Act which arguably weakened the rights of the patent holder by giving generic companies a head start on marketing competing products. The inevitable result would be to chill innovation that has produced amazing recent advances in tackling a variety of serious diseases.

The “CREATES” Act also ignores the recent reauthorization of the Food and Drug Administration that directs the FDA to expedite approval of generic drug applications where there is limited competition, even setting up a 180 day exclusivity period for “competitive generic therapies.”

So now we have two ways of trying to fix this problem:  improving the rules and encouraging the FDA to become more efficient or going to court right off the bat where the only sure result is high legal fees and weaker patent protection.  As noted earlier, the constitutionally protected U.S. patent system is under assault from many directions.  The last thing we need is to add a new avenue of attack with this bill.

What Conservatives Are Saying About CREATES

Americans for Tax Reform blog, “Congress Should Reject the CREATES Act” – Hendrie (1/10)

Morning Consult:  “The CREATES Act will Destroy Innovation in the Health Care Industry” – Marchand (10/2/17)

Eagle Forum Blog:  “Congress May Benefit Trial Lawyers, Endanger Patients, Rob Innovators and Undermine Patient Rights” – Edwards (9/15/17)

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