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Cotton, Ernst, Toomey Introduce the Preserving Access to Cost Effective Drugs (PACED) Act

February 12, 2019

Washington, D.C. - Senator Tom Cotton (R-Arkansas) along with Senators Joni Ernst (R-Iowa) and Pat Toomey (R-Pennsylvania) today reintroduced the Preserving Access to Cost Effective Drugs (PACED) Act, which restores the power of the Patent and Trade Office, federal courts, and the International Trade Commission to review patents regardless of sovereign immunity claims made as part of sham transactions.

Under current law patent holders can pay Indian tribes to take "ownership" of their patents, which allows the tribes to claim sovereign immunity and avoid review in the case of a dispute. This could lead to widespread patent abuse and increased costs for consumers. After Allergan transferred its Restasis patents to the Saint Regis Mohawk Tribe in 2017, the District Court, the Patent Trial and Appeal Board, the Federal Circuit, and the 5th Circuit all ruled that this was an invalid transfer aimed at raising the costs of prescription drugs. The case is now pending further review by the Supreme Court.

"It's past time to end the patent abuse that is raising drug costs for our seniors. This bill will make sure unscrupulous patent holders can't game the system and block their competitors from entering the market. That'll go a long way to help Arkansans get the drugs they need more affordably," said Cotton.

"High prescription drug and health care costs impact all Iowans, but especially our seniors and those on a fixed income. It's past time we remove loopholes that allow manipulators to unfairly stifle competition and inflate prescription drug prices for Iowans who need them most," said Ernst.

"Sham transactions involving the transfer of patent ownership from a pharmaceutical company to a tribe for the sole purpose of shielding the patent from challenges are a clear abuse of our patent system and set a dangerous precedent for other consumer products," said Toomey. "The PACED Act will improve our patent system and protect patients and consumers from higher drug prices by eliminating this egregious loophole."


Background:

• By avoiding review, pharmaceutical firms can prevent generics from coming to market and raise the cost of drugs.
• Similarly, if entities can skirt a review or use a tribe as a straw plaintiff, it becomes harder for businesses to defend themselves against dubious patent claims.
• This legislation would do nothing to prevent pharmaceutical firms from partnering with Indian tribes for research, development, and licensing of drugs.

The PACED Act is supported by the following organizations: Association for Accessible Medicines, The R Street Institute, and Patients for Affordable Drugs Now.