Prepared Remarks of Peter-Anthony Pappas at FTC-DOJ Listening Session on Lowering Drug Prices

Editorial Note: These were the prepared remarks of Peter-Anthony Pappas, who is the Director of IP Policy for Senator Thom Tillis (R-NC). They were delivered on August 4, 2025, at a Listening Session of the Federal Trade Commission  and the Department of Justice on Lowering Americans’ Drug Prices Through Competition. Published with permission.

Prepared Remarks
Peter-Anthony Pappas
Director of Intellectual Property Policy to Senator Tillis
U.S. Senate Committee on the Judiciary
“FTC and DOJ Host Listening Session on
Lowering Americans’ Drug Prices Through Competition”
August 4, 2025

Thank you for inviting Senator Tillis’ office to participate in this listening session. Panelists were asked to address an issue impacting drug affordability and accessibility. I appreciate the opportunity to share some thoughts.

America’s robust intellectual property framework, most notably our patent system, is essential to fostering investments in pharmaceutical innovation and to ensuring accessibility of those medicines to benefit patients and society, both in the short and long terms. Concerns regarding drug affordability are important – as are the efforts to strengthen the patent system to ensure continued innovation now and well into the future.

Let us not forget that Article I, Section 8, Clause 8, of the U.S. Constitution grants Congress the enumerated power “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” How many other countries had the foresight to embed IP into their very founding?

The U.S. leads the world in pharmaceutical innovation and this leadership is indeed built upon the strength of our patent system, which has enabled countless new medicines, transformed the health of Americans, and fueled tremendous contributions to the economy. This is no mistake. American exceptionalism when it comes to biomedical innovation has been facilitated by carefully crafted policies that sought to achieve this outcome, and by all accounts, they have proven a remarkable success.

Given this success, any proposed changes to the patent system or restrictions on its use should be based on demonstrated need and robust and reliable data and facts. In the pharmaceutical area, those calling for such changes have not met that heavy burden. Allegations regarding so-called “patent thickets” and “evergreening” have been invariably based on misleading data that has been thoroughly debunked; yet, this unreliable data continues to be cited and harmfully influences the policy debate surrounding drug pricing.

Concerned with this trend, beginning in 2022 Senator Tillis sent multiple letters to the USPTO and the FDA that raised questions regarding plain errors in data published, for example, by the group I-MAK. For years, I-MAK and affiliated groups, including certain commonly-funded academics, had claimed in their reports and writings that most medicines are covered by dozens or hundreds of patents each, allegedly resulting in exclusivity periods that last 30 or more years. It was evident, however, that many of the examples cited in such sources had already gone generic shortly after, or in some cases even before, they were published. Emphasizing the importance of reliable evidence, Senator Tillis therefore requested that the FDA and the USPTO conduct a study regarding whether this data is reliable, as it underlies many of the legislative and policy proposals in this area.

In June 2024, the USPTO alongside the FDA published a report that countered the approach and conclusions raised by these groups. The study refuted various claims by such groups, including acknowledging the cycle of innovation and confirming that the number of patents may not be predictive of the timing of generic entry. The study also concluded that the number of patents claimed by I-MAK were erroneous, because it was not appropriate to include abandoned applications in the numbers of patents as they do not pose a barrier to competition, and that a total of all pending and abandoned applications is not a meaningful metric. With respect to exclusivity periods, the report concluded that the timing of generic competition is not fully reflected by a computation of patents and exclusivities, as it can be affected by other factors.

Both academics and innovators whose products appeared in such reports have also refuted the numbers of patents published by I-MAK, as well as the inference that the expiration date of patents is necessarily, or even commonly, an indicator of when generic drugs enter the market. Both the FDA and the USPTO, in fact, held listening sessions in January 2023, which, consistent with the conclusions of the later 2024 report, showed that the average effective exclusivity period for drugs is around 13 years. The testimony and docket in these listening sessions also showed that many of the medicines that I-MAK claimed were covered by “thickets” in fact had patent numbers in the single digits, and had already become generic. Earlier this year the USPTO presented additional analysis that showed that large patent families, that many claim amount to so-called “patent thickets,” may be an issue in other fields, but that they are not actually common in the pharmaceutical industry.

In addition to these troubling data inaccuracies, those who target the patent system as a means to lower drug prices often disregard the careful balance that the system strikes between incentives for innovation and access to generic drugs and biosimilars. It is critical to keep these incentives in focus, as that is what brings new and improved medicines to patients in the first place.

Simply put, we would not be having a conversation today regarding drug affordability and accessibility if it were not for the U.S. patent system, which encouraged and enabled these drugs to exist in the first place. There is a reason why the world looks to our country when it comes to
strong patent rights.

Senator Tillis is a sponsor of a series of bills to restore and bolster American innovation and provide more certainty for patents. One bill, PERA, would ensure that there is robust subject matter eligibility for patent protection, so that we continue to encourage American innovation, and so that we do not fall behind Europe and China in critical fields such as cutting-edge medicine. Currently, filed patent applications on diagnostic tests – regardless of how useful, novel, and non-obvious the technology may be – are essentially “dead on arrival” due to the current state of our laws. This is extremely detrimental, as it holds U.S. innovators back from developing the best diagnostic capabilities, as was evident in our lag to develop testing, compared to Europe and Asia, during the COVID pandemic. Another bill, the PREVAIL Act, is intended to bring back balance regarding Patent Trial and Appeal Board proceedings and to eliminate gamesmanship, by bad actors, at the PTAB. Other patent-related bills that have been proposed – specifically, those that aim to address so-called “patent thickets” and “evergreening” – do not address competition concerns, because, again, the evidence does not show that there is a “patent thicket” or “evergreening” problem in the pharmaceutical space. Further, these proposals reduce incentives for innovation for new medicines or R&D.

Another area that does not require further legislation is patent settlements. We should be encouraging patent settlements that lead to generic or biosimilar entry. In this area, the FTC and the DOJ already have authority to enforce the law under Supreme Court guidance and already receive information regarding settlement agreements from companies. We should be careful not to discourage pro-competitive settlements.

And then there is the area referred to as “product hopping.” There is discussion to address conduct in connection with improvements to a medicine, regardless of whether the original product is still marketed. The FTC has the authority to address unfair competition and it would be unwise to allow an antitrust cloud to be placed over improving medicines.

It is also troubling to see proposed legislation aimed at eliminating the ability to enforce certain patents against a generic or biosimilar company because they have terminal disclaimers. A terminal disclaimer is a fundamental part of the patent system that is commonly used across technologies. Prohibiting an innovator from enforcing more than one patent connected by a terminal disclaimer would negate the ability to enforce valid patents.

There has also been reference to “skinny labeling” and creating a safe harbor against induced infringement. Induced infringement is a fact based matter – it is not appropriate to encourage infringement by creating a safe harbor.

Looking ahead to the development of the FTC and the DOJ joint report on anticompetitive practices in the pharmaceutical markets, there is one consistent theme that has emerged across these listening sessions as disrupting the careful balance built into our IP system. And that is the role of pharmacy benefit managers in blocking access to generics and biosimilars, impeding efficient competition and access in the pharmaceutical market. As the agencies consider recommendations to improve the affordability of pharmaceuticals by increasing generic and
biosimilar availability and promoting competition, reforms that address these misaligned incentives will be essential.

Moving forward, we must take extreme care. The Biden Administration unfortunately took the novel approach of simultaneously politicizing and weaponizing IP. It proposed a framework for exercising march-in rights under Bayh-Dole based on the price of medicines. Aside from being counter to the statute, such a framework would destabilize the innovation ecosystem for all technologies. Requests to misuse section 1498 also would destabilize the innovation ecosystem across technologies. IP rights are already under siege from foreign bad actors and the last thing that the U.S. needs to do is subject itself from attacks from within.

In conclusion, the U.S. and its citizens should not be the ones to shoulder the burden of subsidizing the world’s access to drugs and biologics. Nor should the U.S. patent system – the envy of the world – be made the scapegoat for the lack of lower drug costs domestically. These drugs would simply not exist and thus would not be the subject of discussion today if it were not for the U.S. being the global innovation leader.

Thank you.