A potential change in federal patent law for generic drugs could raise federal health care costs by $1.3 billion over the next decade, according to an estimate by the Congressional Budget Office.

Pharmaceutical companies, frustrated by challenges to their patents by generic drug companies, want Congress to require that those challenging drug patents do so in federal court, rather than through an expedited administrative process, Inter Partes Review (IPR).

The Wall Street Journal reports that while IPR challenges usually take between 15 to 18 months to decide, federal law requires the FDA to wait two-and-a-half years after a challenge in federal court to approve a generic drug. Pharmaceutical companies say IPR was never the intended system for settling drug patent disputes.

The CBO reasons that if the exemption is granted, it will take generic drugs longer to be approved, thus keeping drug prices higher and driving up costs for federal health programs, particularly Medicare.

There are powerful stakeholders poised to fight the pharmaceutical lobby on the rule change, including AARP and health insurers. Like consumers, insurance companies are displeased with rapidly rising drug prices and don't want to see the approval of generics become slower.

In the midst of rapidly rising drug costs, even lawmakers who are typically friendly to the pharmaceutical lobby will be reluctant to take any action that could be framed as driving up costs further.

"An exemption would be really bad for consumers and really bad for the system," Matthew Eyles, executive vice president of America's Health Insurance Plans, told the Wall Street Journal.

Pharmaceutical companies, meanwhile, reason that making patent challenges too easy threatens the viability of pharmaceutical research and innovation.

“I understand people being concerned about drug prices, but we won’t have any new drugs come along at all if we don’t support the investment that’s needed to make them happen,” Bart Newland, chief counsel for intellectual property at Biogen, told the Journal.

Instant Insights /

Patent rule for generics could raise federal health care costs by $1.3B

More From HR Executive

Related Stories

Recommended For You