September 18, 2015

Dear Representative,
On behalf of the millions of members and supporters of the National Committee to Preserve
Social Security and Medicare, I am writing to ask you to reconsider your position on a
pharmaceutical industry exemption from the inter partes review (IPR) process, an alternative to
costly litigation for patent review. A July 24 letter to House Speaker John Boehner and Leaders
Kevin McCarthy, Nancy Pelosi and Steny Hoyer that you signed along with seventy-eight of
your colleagues requested that H.R. 9, the Innovation Act, be changed prior to it being brought to
the floor to include an exemption for brand pharmaceutical manufacturers from the IPR process.
The IPR process was created by the America Invents Act in 2011 to provide an expedited
alternative to costly patent litigation in federal district courts. According to a 2013 Government
Accountability Office study, technology companies estimated that the legal and filing fees for
using expedited mechanism such as IPR was between $166,000 and $390,000 compared to $5
million for an infringement case filed in district court. Additionally, the expedited review
processes could substantially reduce the time it takes to conclude patent disputes. Technology
companies report it takes an average of 2 years just to get to trial in district court. In contrast,
by law IPR is concluded no later than 16 months after the initiation of the expedited review.
This means that generic competitors can challenge bad patents more readily and get their
products on the market faster creating savings for payers and, ultimately, consumers.
The need for a less costly alternative to expensive litigation to challenge weak brand patent is
only becoming greater as more high cost specialty drugs hit the market. Specialty drug
spending is driving a recent uptick in overall drug spending. In 2014, pharmacy benefits manager
Express Scripts reported a more than 30-percent spike in specialty prescription drug spending.
Many specialty drugs are complex biologics which commonly cost upwards of $100,000 for a
course of treatment. Biologics are often covered by a multiplicity of patents, making it difficult
for makers of biosimilars to gain legal certainty about patent status. The IPR process can play an
important role in helping biosimilar makers challenge weak biologic patents facilitating the
development of the nascent biosimilar market.
The National Committee is particularly concerned about the potential for an exemption to further
increase already exorbitant drug costs for Medicare and Medicaid. According to the Center for
Medicare and Medicaid Services, total Part D costs per capita grew by almost 11 percent in
2014, driven mostly by specialty drugs. Approximately half of all specialty spending occurs
under the medical benefit rather than the pharmacy benefit because many specialty drugs are
administered by physicians. As a result, this hike in specialty drug spending threatens to drive up
Medicare part B spending as well as Part D spending. And these trends will only get worse as
hundreds of new expensive specialty drugs are estimated to be in the development pipeline.

State Medicaid budgets have already been hard hit by just one new treatment for hepatitis C.
States are projected to spend more than $55 billion if they provide all Medicaid patients with
hepatitis C therapies Sovaldi and its next generation successor, Harvoni. To put this into
perspective, total state Medicaid spending for acute care was approximately $275 billion in 2012.
This is clearly unsustainable for our health care system.
For these reasons, the National Committee strongly opposes efforts to exempt brand name
pharmaceutical makers from the IPR process. Medicare and Medicaid are vitally important
programs for seniors. Soaring prescription drug prices threaten to undermine their stability and
an IPR carve-out for brand drug manufacturers would only make matters worse. The National
Committee therefore urges you to oppose including the exemption of brand pharmaceutical
makers from the IPR review process in H.R. 9.

Sincerely,

Max Richtman
President and CEO
CC:

Congressman John Boehner, Speaker, U.S. House of Representatives Congressman

Kevin McCarthy, Majority Leader, U.S. House of Representatives Congresswoman
Nancy Pelosi, Minority Leader, U.S. House of Representative Congressman Steny
Hoyer, Minority Whip, U.S. House of Representatives Congressman Robert Bob
Goodlatte, Chairman, Judiciary Committee, U.S. House of Representatives
Congressman John Conyers, Jr., Ranking Member, Judiciary Committee, U.S. House of
Representatives