Drug companies are always figuring out creative ways to sustain high prices on brand-name medications. In the latest twist, Allergan this fall transferred the patents covering its eyedrop Restasis to the sovereign St. Regis Mohawk Tribe, admitting outright that its goal was to prevent the patents from being overturned.

Whatever the industry’s excuses, shenanigans like these cannot be justified as aiding innovation. Instead they are anticompetitive abuses that lead to higher prices for millions of patients in need of vital drugs. What can Congress do? Four things:

• Help generic manufacturers get the drug samples they need. Before a generic reaches the market, it must be shown to be equivalent to the brand-name drug. But proving this requires samples that pharmaceutical companies are often unwilling to provide.

This ruse was employed by the infamous “Pharma Bro,” Martin Shkreli. His company, Turing Pharmaceuticals, set up a restricted distribution system for its drug Daraprim that required orders to be approved directly by the company. If someone “calls and asks for 50 bottles of Daraprim, they would have to come to me for approval,” a company official told the blog Pharmalot in 2015. If the request was from a generic maker, “most likely I would block that purchase.”

A 2014 report sponsored by the Generic Pharmaceutical Association estimated that this kind of gaming delayed the approval of 40 generics, at an annual cost to the American health-care system of $5.4 billion.


Congress can address the problem by passing the bipartisan Creates Act. This narrowly targeted bill would require brand-name drug companies to provide generic manufacturers with enough samples to meet the testing requirements. If the brand-name firm refused, the generic company could sue.

• Make clear that drug-distribution programs cannot be patented. When a risky drug needs to be administered in a closely monitored setting, the FDA often requires the manufacturer to create a program called Risk Evaluation and Mitigation Strategies, or REMS. Some brand-name companies are patenting their REMS. This puts generic manufacturers in a tough spot, since FDA regulations require the generic label to mirror the brand label, which includes the REMS.

Case law and the relevant statute suggest that REMS should not be patentable. But Congress could help generics stuck between a rock (“Don’t alter the label!”) and a hard place (“Don’t infringe a patent!”). Simple statutory adjustments could make clear that REMS are not patentable.

• Stop brand names from paying off first-filing generics. As a way of encouraging generic manufacturers to challenge invalid brand-name patents, the Hatch-Waxman Act of 1984 gives the first generics to file such a challenge a valuable 180-day period of market exclusivity. Other generics cannot enter the market until the first-filers do.


Brands have twisted this provision beyond recognition by paying off the first-filers. To protect its sleep-disorder drug Provigil, Cephalon paid four generic manufacturers (all of which filed on the same day) $300 million to delay their entry into the market by six years. A 2010 report by the Federal Trade Commission estimated that “pay-for-delay agreements” cost consumers $3.5 billion a year.

Such arrangements have attracted serious scrutiny. The company that later bought Cephalon agreed to pay a $1.2 billion settlement in 2015 to resolve a challenge to the deal. The Supreme Court warned four years ago that such agreements could violate antitrust law. Yet that hasn’t stopped them, and drug companies have only gotten cleverer.

Lawmakers could enact a simple fix, like the Improving Access to Affordable Prescription Drugs Act. The bill would open that 180-day period to parties other than the first-filer, such as whatever company wins litigation showing the patent invalid.

• Reform the FDA’s “citizen petition” process. Petitions are supposed to let Americans bring concerns about drug safety and effectiveness to regulators’ attention. But the process is being abused.


From 2011-15, the FDA received roughly 125 “citizen petitions” asking it to take a specific action regarding a pending generic application. Almost all of these were filed by brand-name drug companies. According to my research, the FDA denied 92% of them, and 98% of those filed immediately before the expiration of a patent or exclusivity period. In a 2015 report, the FDA’s acting commissioner wrote that the agency was concerned the law “is not discouraging the submission of petitions that are intended primarily to delay the approval of competing drug products.”

Congress could increase transparency by requiring the FDA to include more information in its annual report—such as a full list of these petitions and any delay in generic approvals that they caused. Lawmakers could also loosen requirements so as to give the FDA broader authority to dispose of petitions summarily.

High drug prices directly harm Americans’ health. There is no excuse when they are the result of blatantly anticompetitive behavior. With these four steps, Congress could bring competition back to the market, with tangible benefits for millions.

Mr. Carrier is a professor at Rutgers Law School.