Ernst, Colleagues Introduce the PACED ACT – Preserving Access to Cost Effective Drugs Act

Washington, D.C. – Senator Joni Ernst (R-Iowa) along with Senators Tom Cotton (R-Arkansas), Claire McCaskill (D-Missouri), Pat Toomey (R-Pennsylvania), and David Perdue (R-Georgia) today introduced the Preserving Access to Cost Effective Drugs (PACED) Act, which restores the power of the Patent and Trade Office and 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 increases costs for consumers.

“Congress cannot look the other way as some pharmaceutical companies attempt to stifle competition and prevent Americans from accessing affordable generic drugs,” said Senator Ernst. “Failure to act could incentivize other industries to use similar tactics to block competitors. Through the Preserving Access to Cost Effective Drugs Act, we can speed up the entry of safe and affordable generic drugs into the market while maintaining the integrity of the U.S. patent system.”

“It’s far past time that we crack down on patent abuse, which is raising 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 seniors get the drugs they need,” said Cotton.

“We watched a company brazenly try to exploit a potential legal loophole to game the system in an effort to protect their bottom line—and keep Missourians from access to cheaper generic drug options in the process. That should be illegal, and our bipartisan bill would make it so by ending this astounding assertion of sovereign immunity to avoid patent review, before any other companies follow suit,” said McCaskill.

“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. The PACED Act will improve our patent system and protect patients and consumers from higher drug prices by eliminating this egregious loophole,” said Toomey.

“Gaming the patent system is not good for consumers or businesses,” said Senator Perdue. “I’m disappointed this legislation even has to be offered due to a few bad actors trying to do an end run around the U.S. Patent and Trademark Office.” 

Background:

• By avoiding review, pharmaceutical firms can prevent generics from coming to market and raise the cost of drugs.
• Similarly, if non-practicing entities, often referred to as “patent trolls,” 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 which represent hundreds of companies across the U.S.: R Street, The Electronic Frontier Foundation, Engine, American Consumer Institute Center for Citizen Research, Public Knowledge, America’s Health Insurance Plans (AHIP), Association for Accessible Medicines, United for Patent Reform, High Tech Industry Alliance, Patients for Affordable Drugs Now, BlueCross BlueShield Association, Blue Shield of California.